When Giving Goes Wrong: A Charity Scam

THE SCAM: As the holiday season approaches, there’s a beautiful spirit of giving that fills the air, with many of us feeling inspired to spread joy and lend a helping hand to those in need. However, the rise of charity scams that prey on the kind-hearted are becoming more and more common. For every genuine organization striving to make a difference, there seems to be a cunning trickster ready to exploit people’s compassion for their own gain. This happened to one woman who opened her heart – and her wallet – to a charity, only to end up scrambling to secure her accounts and recover money lost to scammers.

THE SCHEME: Lily had always been raised with the philosophy ingrained in her by her mother that “If you have more than you need, give it to someone who doesn’t.” It was around the holidays when Lily came across an ad for a charity that collected money to help children who were affected by natural disasters right there in her home state. Upon seeing the devastating images the advertisement displayed, poignant images of children amidst the debris of their destroyed homes, parents holding them closely, and volunteers providing food and water, Lily decided to donate to the cause.

When Lily clicked on the ad for more information, a website for the charity Children’s Hopelessness Foundation popped up. The charity’s site appeared legitimate, with stories of real families affected by disasters, special updates, and a countdown for a “Holiday Relief Fund,” which encouraged people to “hurry up” and donate within 12 hours to “double their charitable donation.” Excited to give back and moved by the emotional testimonials, Lily immediately donated $150. She received a compassionate message in return, thanking her for her donation and information about a special family who benefitted from her generosity. Lily then decided to share the charity’s information with her friends and family in hopes that others would participate in giving back this holiday season. Friends and family who contributed also received heartfelt emails of thanks along with stories of other families who were helped by their donations.

Lily then received a message from her friend Megan, who had suspicions about the charity. “Hey, Lily, have you ever heard of this charity outside of their emails? I can’t find anything about them,” Megan texted. Megan’s question planted a seed of doubt, and Lily began researching the charity. In just a few clicks, Lily discovered that the charity’s social media links were not functioning, and everything she clicked on led back to this one website. There was no information linking it to a reputable source. There was no other information about the charity anywhere online. Just the one, very well constructed and believable website. Her heart sank – was this a scam? She decided to contact her bank to get assistance with verifying that the charity was legitimate. Unfortunately, her bank confirmed that the account associated with Children’s Hopelessness Foundation had been “flagged for fraudulent activity.” The bank representative explained that once the transaction is processed, there is no way to retrieve the money. Lily was now out of the $150 dollars, and worse, her family and friends, who she encouraged to donate, had also lost their money to this scam.

FRAUD SQUAD EXPLAINS

Charity scams exploit the goodwill and compassion of individuals, especially during times of crisis or the holiday season. These scams typically involve fraudsters creating fake charities with convincing websites, emotional stories, and urgent pleas for donations. They prey on generous people who want to help those in need, often targeting the elderly and those unfamiliar with online security practices. According to the Federal Trade Commission, Americans reported losing over $148 million to imposter scams, which includes charity fraud in 2020 alone. The rise of digital platforms has made it easier for scammers to reach potential victims, but fraudsters also still rely on unsolicited phone calls, texts, and emails. In this particular scenario, these scammers actually posted legitimate ads on social media websites, luring unsuspecting victims like Lily to their website.

FRAUD SQUAD’S ADVICE

Amidst the holiday spirit of giving, it’s essential to remain vigilant and informed to protect yourself from charity scams. These deceitful schemes can be emotionally manipulative, but by recognizing red flags and taking appropriate steps, you can ensure your donations make a genuine impact.

Red Flags:

• Urgent Appeals: Be cautious of charities that pressure you to donate immediately or that have a limited-time need. That “countdown” Lily encountered on the website, pressuring people to donate within 12 hours to double their charitable donation, was a major red flag!
• Lack of Information: Genuine charities have transparent information about their mission, programs, and financial statements. Beware of organizations with limited or vague details and non-functioning links or phone numbers.
• Unsolicited Requests: Be wary of unsolicited emails, phone calls, or social media messages asking for donations.

How to Verify that a Charity is Legitimate:

• Research Thoroughly: Utilize watchdog organizations to verify charities. These organizations are committed to serving the best interests of the donating public, assisting in the research and evaluation of nonprofit organizations.

BBB Wise Giving Alliance

Charity Navigator 

Charity Watch

• Verify Contact Information: Ensure the charity has a physical address, working phone number, and an official domain email address.
• Check Registration: Verify that the charity is registered with the appropriate state and federal agencies. In the U.S., you can check with the IRS to see if the organization is a tax-exempt charity. Charities are required to complete an annual tax document: Form 990. This form provides information regarding how the charity is collecting donations and how it is using the money. Visit the 990 Finder to get more information about non-profits based in the United States.
• Direct Donations: Whenever possible, donate directly through the charity’s official website [once verified] rather than through third-party platforms or intermediaries – like representatives who make unsolicited calls over the phone.

Financial Institutions: Keep Your Customers Protected

Information is PARAMOUNT. Share the red flags listed above to your customers and educate your employees on the following:

• Stay Informed: Familiarize yourself with the common signs of charity scams and stay updated on the latest scam tactics.
• Verify Suspicious Activity: If a customer expresses concerns or shows signs of being targeted by a scam, assist them in verifying the legitimacy of the charity.
• Make sure that employees are aware of when and to whom they should escalate potential cases of fraud.
• Encourage customers to report suspicious charities or cases of fraud to the Federal Trade Commission (FTC) https://www.ftc.gov/complaint
• Direct customers to the reliable sources listed above for verifying charities [BBB Wise Giving Alliance, Charity Navigator, Charity Watch, and Candid].

SOURCES:

A Generous Heart Betrayed: The Story of a Fake Charity Scam

https[:]//staycybersafe[.]substack[.]com/p/a-generous-heart-betrayed-the-story?utm_campaign=post&utm[_]medium=web

BBB Wise Giving Alliance

https://give.org/

Candid.

https://candid.org/

Charity Navigator

https://www.charitynavigator.org/

Charity Watch

https://www.charitywatch.org/