Floods, tornadoes, wildfires. Disasters are in the news every week, impacting many lives. Charities that serve disaster victims, like the American Red Cross, help with food, shelter and other emergency needs. Legitimate charities use donations to fund those emergency services when they are needed.
Unfortunately, fraudulent charities are out there after every disaster event scamming generous donors. They solicit donations that will never be used to serve anyone other than the fraudsters. The IRS is very interested in stopping fraudulent charities. So interested, charity scams have been on its “DIRTY DOZEN” tax scam list every year for a long time.
Follow these four tips to make sure that the charity asking for your donation is legitimate:
- Verify, Then Trust – Be wary of charities with names that are similar to a familiar or nationally-known organization. Some phony charities use names or websites that sound or look like a respected, legitimate organization. IRS.gov has a search feature, Tax Exempt Organization Search that allows donors to find legitimate charities. Check it before you give.
- Watch for Bogus Solicitations – A long-standing scam that occurs after major disasters is to impersonate charities to get money or private information from well-intentioned donor/taxpayers. Scam artists use a variety of tactics, such as contacting people by e-mail or phone solicitations, or even going door-to-door. Treat e-mail solicitations with extra care because they could contain malware, on top of taking your money.
- Keep Information Confidential – Scam artists may ask for you to provide your Social Security number or passwords that can be used to steal your identity and money. It’s quite common to make legitimate donations using credit cards, but it’s essential to make sure you know who you are speaking with before giving out your information. Did they call you? Confirm the organization and call them back, or make the donation online.
- No Cash – Ever – For security and tax record purposes, contribute by check or credit card. Those methods provide documentation of the donation. They could also provide some recourse if you have questions or concerns later. Besides, who carries cash anymore? Charities are supposed to provide a contemporaneous acknowledgement after each donation. Keep a record of all donations just in case.
Fraudsters can use disasters as a cover to steal donations intended for legitimate charities that help disaster victims. Following these four tips can prevent your donation from going to a phony charity or avoid giving confidential financial information to an identify thief.