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Charity scams
5 Tips: How to make sure you're really giving to a charity.
September 12, 2005: 4:52 PM EDT
By Gerri Willis, CNN/Money contributing columnist

NEW YORK (CNN/Money) - Even before Hurricane Katrina slammed into the Gulf Coast, scammers were hard at work trying to get your charity dollars.

The FBI estimates there are over 2,300 Web sites dealing with aid for Hurricane Katrina victims. They suspect most of those sites to be fake. After Hurricane Katrina scammers are four times more prevalent than after September 11th, according to the watchdog site www.Scambusters.org.

While the need for aid continues to echo throughout devastated areas, how can we be sure charities are for real? In today's 5 Tips we'll tell you how to protect yourself from charity scams.

1. Ignore solicitors

If you're getting e-mail solicitations, there is almost a 100 percent chance that it is a scam, according to Scambusters.org. If you're a legitimate charity, you don't need to solicit funds right now, says Art Taylor of the Better Business Bureau Wise Giving Alliance.

Answering an e-mail solicitation could not only cost you money, but you might become a victim of identity theft by doing so. The solicitation may appear to be a request from a charitable organization that then links to a fraudulent site (or even a legitimate site). The users are then asked to provide personal information that can further expose them to future compromises.

Computer Security expert Fred Rica says you should never provide account information, a PIN, a Social Security number or any kind of identifiable information like that even if you think it's from a legitimate company.

You should also avoid solicitations from telemarketers. Telemarketing is the most expensive kind of fundraising out there, says Taylor. Typically telemarketing contracts specify that the telemarketing company keep 80 percent of what they raise. If you're giving $100 to a telemarketer, the charity is only seeing about $20 of that. If a company does resort to telemarketing, it's usually a sign that your charity organization has some serious priority flaws.

2. Warning signals

The Federal Trade Commission says that complaints about fraudulent charities have increased every year for the past 5 years. One example of a Web site currently under investigation by the Internet security company NameProtect is site www.katrinareliefonline.org. It resembles the Red Cross Web site and the phone number connects you to the organization. But according to NameProtect, it is very likely a scam.

"The look and the feel of the Web site is very much similar to the Red Cross page, says Kimberly Wieland of NameProtect. "You have no idea if your money goes to the Red Cross or not," she said.

Other fraudulent sites as Katrinahelp.com, katrinadfamilies.com and NewOrleansCharities.com began popping up after the hurricane. Very often scammers will insert keywords into their sites to trick people into thinking they're legitimate, says Wieland.

"Scammers will register domain names they think will drive people to their site, like hurricanerelief.com. And it costs only about $20 a year for people to register a domain name.

Another red flag, says Wieland, is to see where the domain name was registered. Many scammers register in small foreign countries so it's harder for the government to track them. If you see a web address ending in different letters, you should know you're dealing with overseas destinations.

"It's very common that a scammer will try to look as legitimate as possible even stealing logos from organizations like the Red Cross," says Wieland. So you really have to be on the lookout for other signs like misspellings and incorrect grammar.

3. Do a charity check

Right now much of the relief aid is handled by charities like the Red Cross and the Salvation Army, both of which are mostly concerned with feeding and housing victims. As time goes on, there will be more opportunities to give to different causes.

You can match your needs and personal causes with specific charity organization. Check out the charity ratings organization www.CharityNavigator.org. If you're an animal lover you may be directed to the Humane Society. You'll be able to get a brief summary of what the organization is doing and compare it to other charities.

Sandra Miniutti of Charity Navigator says that every day they are getting more and more calls about how charities are handling the situation. The more prevalent smaller, specialized charities are, the more homework you need to do.

"Make sure the organization is registered as a 501c3 status organization," she says. This means that they are registered with the IRS and you will able to get a tax deduction on your donation.

4. Designate your gift

Watch out for charities that spend more than 60 percent on administrative costs like advertising or fundraising. When you give a donation, you want your dollar to go as far as possible. So tell the organization where you'd like your money spent.

Trent Stamp, the head of Charity Navigator, says people should write on their checks exactly how they want their money used. This obligates the charity both ethically and legally to spend the gift in that manner, he says.

5. Be a tattletale

State Attorney Generals have already begun to file lawsuits and designate cybercrime units to track charity scams on the Internet. And you can play in key role in preventing these scams from taking advantage of peoples' desire to help.

If you are a victim of an online scam, or you want to report a suspicious charity, don't wait. First, contact the FBI's Internet Crime Complaint Center at www.ic3.gov. You can file a complaint online.

If you have a tip, contact the FBI Tips and Public Leads at www.fbi.gov. You can also contact the Better Business Bureau's Wise Giving Alliance at www.give.org.

The Federal Trade Commission is also a good place to lodge a complaint. Contact the agency at www.ftc.gov or call 877-382-4357.


Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to 5tips@cnn.com.  Top of page


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