Thwart charity scams
5 Tips: How to make sure you're really giving to a charity.
NEW YORK (CNN/Money) - As the scandal involving Red Cross workers and Katrina donations shows, you can never be completely sure your money is safe when making donations to charity.
Justice Department officials said 22 people working for a Red Cross contractor at a call center in Bakersfield, California, filed false claims worth tens of thousands of dollars.
The need for aid continues to echo throughout devastated areas, so make sure that the money you intend for charity gets to those who need help. 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.
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 similar identifiable information, even if you think the e-mail is 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 charity organization does resort to telemarketing, it's usually a sign that it 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 five 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.
"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.
Another way to spot a fraudulent site, 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 than .com, .org or .net, you should know you're dealing with overseas destinations.
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 organizations. 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 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 attorneys general 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 thwarting these scams.
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.
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 firstname.lastname@example.org.