Donate Wisely: A Guide to Scams Targeting People With Good Intentions

Unfortunately, there are some bad apples out there looking to take advantage of others. According to the Federal Trade Commission, consumers lost nearly $8.8 billion to fraud in 2022. That’s billion with a “b.” And, sadly, this issue isn’t going away.

There’s a wide range of scams, with new types surfacing all the time — all with the intention of bilking victims out of their hard-earned money. And while scammers aren’t particularly picky with who they take money from or when they do it, they tend to target the more vulnerable members of society and take advantage of societal problems for their own gain. A perfect example of this: charity and disaster fraud.

What Is Charity and Disaster Fraud?

Charity and disaster scams appeal to your sense of compassion. The scammer pretends to be from a charity, like the Red Cross, and they say they need your help — more specifically your money — to help save lives.

Notable Examples of Charity and Disaster Fraud

As sad as it is, when a tragic event takes place, oftentimes fraud follows. A couple of notable examples include:

• Hurricane Katrina – There was a plethora of fraud following Hurricane Katrina in 2005, ranging from contract to charity fraud. According to an FBI report in 2009 — four years after the hurricane hit — more than 1,300 individuals were indicted for Katrina-related crimes.
• COVID relief – The COVID pandemic was a time of uncertainty. And fraudsters took advantage of it. In August 2023, the Justice Department announced the results of their nationwide COVID-19 fraud enforcement action, stating that they’ve seized over $1.4 billion in COVID-19 relief funds that had been stolen. And they charged over 3,000 defendants with crimes.

Types of Charity and Disaster Fraud

So how are these fraudsters committing their crimes? In a variety of ways and involving any number of the classic scam strategies such as phishing, spear phishing, threatening, or overcharging.

• Emails – Fraudsters will send a phishing email, posing as a government or charitable organization. They will try to trick you into providing sensitive personal information such as credit card numbers or your Social Security number.
• Text messages – Known as smishing (SMS + phishing), fraudsters may send you a text message posing as an organization and provide a malicious link infected with a virus or spyware, or direct you to a webpage that requires your personal information to log in to “your account” … only it’s not your account, it’s a scam to steal your information.
• Crowdfunding websites – Fraudsters may ask you to help others by providing a donation via a crowdfunding website such as Kickstarter. Only those funds won’t go to help the impacted, they’ll go into the fraudster’s pockets.
• Cold calls – Fraudsters may call posing as a charity and try to get you to donate, or as a government agency asking for personal information to determine your eligibility for financial aid.
• Gift cards or crypto – Fraudsters will pretend to be from a charity and say they need your help after a disaster … and your donation has to be made by gift card or in crypto. This is another scam to steal your money … charities will never ask you for a gift card or crypto.

How To Identify Fraud

So, how can you tell what’s real and what’s a scam?

• Be skeptical of unsolicited calls or emails – Government agencies do not call, text, or email asking for financial or personal information. So if you get a cold call from a government agency asking for personal or financial information, hang up because it’s fake.
• Hover over links – If you get an email from an individual or organization that contains a link, hover over it before you click and see where it’s actually directing you. If it’s not the website that you know to be real, don’t click.
• Look out for fees – Government agencies will not charge fees to apply or receive disaster assistance.
• Don’t trust typos – If a message is riddled with grammatical and spelling errors, it most likely didn’t come from a legit organization. Reputable companies employ professional writers and editors.

How To Donate Securely

Don’t worry … there are many charitable organizations that are actually trying to help. But how do you donate securely?

• Do your research – Use your favorite search engine and type in the cause of your choice followed by phrases such as, “highly rated charity” or “complaint.” There are also government websites such as Give.org that provide information about trustworthy charitable organizations. And the Federal Trade Commission (FTC) provides tips on how to donate wisely.
• Use a credit card – If you choose to donate money to a cause, consider using a credit card to do so. Not only is it a secure form of payment because you can track all transactions, but if you choose the right one, you can get additional fraud protections against unauthorized charges. If you’re in the market for a credit card, remember that applying for one brings a hard inquiry on your credit report. So keep an eye out for pre-approval offers or see if you pre-qualify first, both of which carry soft inquiries and won’t impact your credit score.

Who Is Most At Risk of Being Defrauded?

Fraudsters will gladly steal money from anyone, no matter your age, income level, education, or any other demographic characteristic. But some could be more at risk in certain situations than others.

• Gen Z’ers (born between 1996 and 2010) have reported high rates of falling for online scams. This is perhaps because they simply use technology more than other generations, so therefore have an increased chance of encountering a scam. Also, growing up with the internet may give Gen Z’ers a familiarity with the technology that can, in some instances, incentivize them to choose convenience over safety.
• Senior citizens — any individual 65 or older — are also increasingly targeted for online scams because scammers perceive them as less tech-savvy and more financially stable.
• Residents of areas affected by a natural disaster, who are in their most vulnerable or charitable times.

There are also specific environmental and emotional factors that may make certain individuals more susceptible than others. According to a 2021 AARP report, there are four main factors that may increase susceptibility to scams:

1. Changes in environment or stressful situations, such as a natural disaster.

2. A heightened emotional state, either positive or negative.

3. Exposure to fraud in the past.

4. A lack of support systems.

How To Protect Vulnerable Individuals From Charity and Disaster Fraud

You can see how all four of those previous factors could make someone more vulnerable to fraud. So, how do we protect ourselves?

• Increase your fraud education, because the more you know what to look for, the better you can protect yourself.
• Use protective tools such as call blocking, account alerts, and password management.
• Choose a credit card that provides fraud protection.
• Do your research before donating and only give to established charities or groups.

What To Do if You Have Already Been Defrauded

We’ve talked about how to spot and avoid fraud. But what do you do if you or a loved one discover that you’re a victim?

• If your identity has been stolen, report it at IdentityTheft.gov.
• Victim of credit card theft? Contact your card issuer to report it and dispute any unauthorized charges.
• Review all of your accounts and credit reports for suspicious activity and contact the respective issuer/bank/merchant/credit reporting organization if you spot anything.
• Contact the FTC. The FTC can use the information to build cases against scammers, spot trends, and educate others. The FTC also provides a list of actions to take in response to a variety of different types of scams.
• The U.S. Department of Justice provides a list of contacts to report fraud, including The National Center for Disaster Fraud.

The Effects of Fraud

Unfortunately, fraud can have pretty serious short- and long-term impacts.

• Damaged credit – If someone steals your credit card and makes a bunch of purchases with it, it’s probably safe to assume they’re not going to pay the bill. This means your credit score is at risk of going down, which may then require a concerted effort to rebuild it.
• Loss of money – Whether you donated to a scam charity or fell victim to identity theft, your hard-earned money is at risk.
• Loss of time – The recovery from fraud — both financially and mentally — can take years.
• A criminal record – If someone stole your identity, committed other crimes, and gave your information to the police, you could end up with the rap sheet.
• Impacted mental health – Being the victim of a crime can leave you feeling violated, unsafe, and generally untrusting of others.

Sadly, when disaster occurs, fraudsters typically follow, trying to take advantage of those in their most fragile and emotional state. So knowing what to look for and how to respond is key to avoiding falling victim.