Avoiding Charity Scams

In general, people are good. When we tune into our preferred media outlet– TV, podcasts, social media– and witness suffering, we want to help. Even in a time where there never seems to be a shortage of disasters, the internet makes it easier than ever to help others. In just a few clicks, we can buy a hot meal for a family of refugees, help rebuild a flooded house, or finance life-saving medication for a loved one.

What is charity fraud?

Unfortunately, the internet also creates more openings for those who aim to exploit the philanthropic impulses of good-natured people. A donation or charity scam is a type of fraud in which funds are solicited for a humanitarian cause with the claim that a legitimate charity will direct the funds to those in need while no such organization exists. The ease of website creation and access to a merchant account has allowed virtually anyone to set up the necessary infrastructure for a scam quite quickly. Each “breaking news” story yields hundreds of fake charity pages online, with our money – and often our personal information – ending up in the hands of bad actors or scammers instead of the people who really need it.

Telltale signs of charity fraud

When we want to assist others, it can be difficult and even seem hard-hearted to be suspicious of passionate pleas for help. Those who wish to make a real difference in someone’s life should watch for any of the following red flags, which could signal a charity scam: 

• An overly general description of what the donations are for (i.e. “Help Ukraine!” “The children need us!”)
• No evidence or availability of detailed reports for funds received or other financial documentation
• Being asked to donate through wire transfer, gift card, cryptocurrency, or by sending cash
• Using guilt as a motivation for helping
• Being pressured into sending money immediately 
• Being redirected to another website which does not seem to belong to a non-profit at the time of payment

Trust but verify 

Naturally, you still want to donate and help others. Here are some quick tips for ensuring that your funds make it to those who need  it instead of lining the pockets of scam artists:

• Always check to ensure the charity collecting funds is accredited. Use resources like Charity Navigator, GuideStar, and the BBB to validate the legitimacy of a charity
• Confirm that the charity in question is not posing as a legitimate charity by utilizing a deceptively similar name to a known non-profit. 

Gaining the attention of card brands 

Card brands have previously highlighted the rising number of scams related to raising funds for the benefit of Ukraine, relief for Hurricane Ian, and other humanitarian crises. The card networks have asked their network partners for help in weeding out bad actors by ensuring that all merchants who accept donations are properly identified and undergo adequate due diligence.  

Payment providers should ensure they are able to swiftly identify any new merchants who claim to be charities and carry out appropriate due diligence. If you are a payment provider looking for insight into your merchant risk, read more about how MerchantView can enable you to expand your portfolio safely and securely.

For more information on identifying donation scams, please see the following resources:

• “How to Donate Wisely and Avoid Charity Scams” – Federal Trade Commission
• “Charity and Disaster Fraud” – FBI
• “Charity Scams” - AARP