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Charity Scams

Charity scammers are out in full force less than a week after the Notre Dame Cathedral fire

The FTC reminds consumers to ask qualifying questions and to call the agency with any concerns

In the wake of the fire that claimed much of Paris’ famed Cathedral of Notre Dame, the Federal Trade Commission (FTC) is alerting consumers about scams that might play on their sympathies with the end goal of preying on their bank accounts.

“When a natural disaster hits or a tragic event happens, you might be looking for ways to help the people in communities affected,” the FTC’s Christina Miranda warns in a video that addresses disaster-related charity scams.

“Unfortunat...

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    IRS warns of multiple scams in wake of recent tragedies

    Scammers often try to capitalize on a national tragedy to bilk consumers

    Consumers are targeted by scams every day, but the Internal Revenue Service (IRS) warns that recent tragedies have unfortunately created an uptick in scams seeking to exploit Americans’ desire to help victims.

    The IRS points out the country has experienced a series of major disasters and a mass shooting in quick succession, so donors need to be particularly vigilant to look for signs of a scam before sending money.

    “These scams evolve over time and adjust to reflect events in the news, but they all typically are variations on a familiar theme,” said IRS Commissioner John Koskinen. “Recognizing these schemes and taking some simple steps can protect taxpayers against these con artists.”

    Beware of unfamiliar charities

    Consumers should look out for appeals for donations from unfamiliar charities, or organizations that have names similar to a legitimate charitable organization. They should also be highly suspicious of appeals that come in the form of an email, text, or telephone call since legitimate charities usually stick to mass advertising like television commercials to solicit donations.

    Consumers who want to donate to any charitable cause should initiate the search for a group themselves, not respond to direct contact that may not be legitimate. The American Red Cross, Salvation Army, and United Way are three groups that are involved in providing help to victims of wildfires, hurricanes, and mass shootings.

    The IRS, meanwhile, is also trying to help victims of the California wildfires. It's extending the deadline to file certain individual and business tax returns and make certain tax payments until Jan. 31, 2018. The extension postpones deadlines beginning October 8 and applies to residents of seven California counties.

    Impersonating IRS agents

    The tax agency spends a good deal of its time countering the efforts of scammers, who often pose as IRS agents to fool consumers. Most recently, it has warned about scammers using a phishing scheme to steal client email addresses from tax professionals to access insurance and annuity accounts.

    The IRS reminds consumers that it does not call and leave pre-recorded, urgent messages demanding a call back. If you get one of these calls, it's from a scammer who hopes to scare you into thinking you will be arrested if you do not respond.

    There are legitimate IRS functions that scammers may also try to exploit. The agency has sent letters to taxpayers whose overdue accounts have been assigned to one of four private sector collection agencies. Scammers are already trying to take advantage of this by calling and threatening taxpayers if they do not pay the overdue amount quickly.

    What to do

    If you receive one of these calls but are not aware that you have an overdue bill, it's a scam. The IRS says all of the taxpayers receiving calls about their overdue accounts are well aware of the issue, since they have been corresponding with the IRS about it for years.

    Legitimate contact with the IRS almost always begins with a letter through the U.S. Mail. In rare cases, an IRS official may show up at your home or business, but they will always first establish the time and reason in a letter.

    Any consumers with a question about whether a contact from the IRS is real should go online, look up the number for the closest IRS office, and call the agency directly to inquire.

    Consumers are targeted by scams every day, but the Internal Revenue Service (IRS) warns that recent tragedies have unfortunately created an uptick in scams...

    Class action claims PayPal diverted charitable donations to its own selections

    Plaintiffs say that only fractions of some donations made it to the donors' intended charities

    Donating to charity can be a wonderful gesture, but when consumers make contributions, they expect their money to be used in a certain way. When it’s not, the backlash can be great.

    That’s something that PayPal may be learning after a class action suit was filed against the company in federal court on Tuesday. Lead plaintiffs Friends for Health: Supporting the North Shore Health Center and Terry Kass allege that the company diverted charitable donations away from certain charities and gave it instead to charities that had registered PayPal accounts.

    “The money donated by PayPal’s customers through the giving platform will only be delivered to their chosen charities if, and only if, those charities have already set up a business account with PayPal and a separate account with PayPal Giving Fund,” the lawsuit stated. “If they don’t have both of these accounts, or don’t set both of them up, they will never receive the donation, despite being listed on the PayPal Giving website.”

    Depriving chosen charities

    Paypal began processing and distributing donations back in 2013 after creating the PayPal Giving Fund, allowing users to donate money to their favorite charities by selecting from a list on PayPal’s website.

    However, the plaintiffs say that the system is flawed. Their suit alleges that charities that are listed on the site are not always registered with the company, and donations made to unregistered charities are not processed. The donor and charity are not told about the contribution, the suit states, and unprocessed money is then distributed to organizations of PayPal’s choosing.

    “Tens of thousands of generous individuals after placing their trust in PayPal, have made donations, that, unbeknownst to them, have never reached their chosen charity. Likewise, thousands of charities have been deprived of much needed funds they never knew were even intended for them,” the suit claims.

    Only fractions go to intended charities

    Plaintiff Terry Kass said she made charitable donations to 13 different charities totaling $3,250 using the platform. However, only a small fraction of her donations ended up making it to their intended destination.

    “As such, instead of delivering a combined $3,250 to thirteen different charities, defendants only delivered a combined $100, or 3% of her donation, to those three charities. The remaining $3,150 – which Kass donated to ten local-level charities – was withheld from the intended organizations,” the complaint reads.

    The suit states that these actions go against PayPal’s claims that 100% of donated money would go to selected charities. The plaintiffs are seeking actual, treble, and statutory damages for alleged violations of the Lanham Act and the District of Columbia Consumer Protection Procedures Act, according to Courthouse News. They are also demanding that PayPal provide a complete accounting of all funds that were donated to charities.

    In response, PayPal said in a statement that the company has fostered “positive change and significant social impact by connecting donors and charities,” and that it is fully prepared to defend itself.

    The suit is being handled by Benjamin Richman of Edelson PC in Chicago.

    --

    Editor's note:  This story is about a class-action lawsuit. If you are among the class of consumers described in the suit, you may eventually be eligible to participate in whatever compensation the court awards, if any. Unlike what many people think, you do not "join" a class action -- you are either in the class covered by the action or you are not. 

    Often, consumers included in an award do not need to take any action, as the defendant is required to contact them directly. In other cases, the court and the attorneys who brought the case will issue instructions when the case is settled.

    Please note that under our Privacy Policy, we cannot provide you with the names of other consumers who may be similarly affected. 

    Please see our Class Action Guide for more information. 

    Donating to charity can be a wonderful gesture, but when consumers make contributions, they expect their money to be used in a certain way. When it’s not,...

    Online obituary sites collected unauthorized charitable donations

    Legacy.com and Tributes settle Vermont charges, agree to reform their practices

    It's not just undertakers and florists who profit from death. Local newspapers and online sites have found a steady stream of revenue in the obituary business and now routinely gouge families to run even the simplest death announcement.

    Finding a profitable business model frequently results in looking for ways to milk more revenue out of each transaction, and that's what Vermont says online obit sites have been up to lately. 

    Legacy.com and Tributes have agreed to pay more than $30,000 to settle charges by Vermont that they ran a scheme to solicit unauthorized donations to nonprofits in lieu of flowers.

    “We are pleased to end this practice, which has cost Vermonters unnecessary fees at a time of vulnerability. This is a good outcome for Vermont donors and nonprofits alike.” Attorney General William H. Sorrell said.

    According to Sorrell, the sites directed mourners wanting to donate to nonprofits like the American Cancer Society to Givalike, a third-party website that collected the money, deducted its cut, and sent the remainder to the charity.

    Didn't get consent

    The problem with this is that, in Vermont and many other states, it is illegal to solicit donations for a charity without first getting the charity's consent. Additionally, the state charged that in some instances, neither the deceased nor the immediate family had asked for donations to be solicited for a charity.

    The sites also failed to register as paid fundraisers in Vermont and failed to follow the state's laws regarding charitable solicitations.

    Under the terms of the settlement, Legacy.com and Tributes agreed not to allow software in the obituary of any Vermonter, or in any obituary where a Vermont nonprofit is listed without disclosing that a third-party’s website will be used and disclosing all fees. 

    As part of the settlement, both Legacy.com and Tributes will pay the state for penalties and attorneys’ costs and fees totaling more than $30,000.

    Sorrell's office is still investigating the three California-based principals of Givalike, which is no longer in business.

    It's not just undertakers and florists who profit from death. Local newspapers and online sites have found a steady stream of revenue in the obituary busin...

    Report finds telemarketers pocket most of the funds they solicit for charities

    For-profit fundraisers kept 52 cents of every dollar they raised

    For-profit telemarketers raised $302 million for charity from New Yorkers in 2013. They kept $156 million, more than half. That's according to a report, "Pennies for Charity," released today by New York Attorney General Eric T. Schneiderman.

    “New Yorkers who are generous enough to donate their hard-earned money to charity deserve to know how that money is really spent, including how much is used to pay for-profit telemarketers,” Schneiderman said. “Our Pennies for Charity report is an important tool for transparency because it informs the donating public what portion of their charitable contributions made through telemarketers went to the outside fundraisers’, and how much was left to support charitable programs.”

    At 48%, the share of funds raised by for-profit telemarketers that went to charity in 2013 increased significantly in comparison to 2012, when only 37% of the funds raised went to the charitable missions donors intended to support. The Pennies for Charity report has been published annually for the last 12 years, drawing attention to this issue.

    Other significant findings from analyzing the 573 fundraising campaigns covered in the Attorney General’s report include:

    • In 75%, or 435 of the 573, the charities retained less than 50 percent of the funds raised.
    • In 49.2%, or 282 of the 573 campaigns, the charities retained less than 30% of the funds raised or expenses exceeded contributions.
    • Of the 573 campaigns, 316 were conducted on behalf of organizations located outside of New York.

    Expensive and intrusive

    Despite improvements in the share of funds going to charitable purposes, Schneiderman said telemarketing remains an expensive and intrusive method of raising funds for charity, and suffers from significant limitations compared to other forms of fundraising:

    • it encourages “me-too” charities which sound like respected and effective charities, but are much less effective; for example, the well-known “Make-a-Wish Foundations” and the me-too “Kids Wish Network,” which pays out more than 2/3 of its telemarketing revenue to fundraisers;
    • the largely anonymous interaction between telemarketer staff, located at a remote call center, and the call recipient is difficult to detail after the fact, making policing or proof of misrepresentation difficult;
    • many charities fail to actively monitor the fundraisers they engage and hold them accountable. The Attorney General has found a number of fundraisers with significant histories of violations who continue to secure fundraising contracts, seemingly with little board oversight or involvement.

    What to do

    chneiderman issued the following tips when making donations via phone solicitation:

    Resist Pressure To Give On The Spot.If you receive a call from a telemarketer, do not feel pressured to give over the phone. You can ask to receive information about the cause and a solicitation by mail.
    Ask The Telemarketer. Ask the caller what programs are conducted by the charity, how much of your donation will be used for charitable programs, how much the telemarketer is being paid and how much of your donation the charity is guaranteed.
    Ask How Your Donation Will Be Used. Ask specifically how the charity plans to use your donation, including the services and organizations your donation will support. Avoid charities that make emotional appeals and are vague in answering your questions. Be wary if an organization will not provide written information about its charitable programs and finances upon request. Any legitimate organization will be glad to send you this information.
    Look Up Charities. Review information about the charity before you give. The Attorney General’s interactive website allows potential donors to easily search the "Pennies for Charity" report by the name of the charity or by region in New York State.Also confirm that the charity is eligible to receive tax-deductible donations by searching the IRS website.
    Give To Established Charities. Donate to organizations you are familiar with or ones with a verifiable record of success in meeting their charitable missions. Closely examine charities with names similar to more established organizations.
    Never Give Cash. It's best to give your contribution by check made payable directly to the charity. This is safer than giving by credit or debit card and far safer than sending cash. Be careful about disclosing personal or financial information; never give out such information to an organization or individual you don't know.

    For-profit telemarketers raised $302 million for charity from New Yorkers in 2013. They kept $156 million, more than half. That's according to a report, "P...

    New Yorker convicted in bogus Israeli charity solicitations

    Money raised for orphans and cancer victims went into fund-raisers' pockets, state charged

    A New York man, Yaakov Weingarten, has been convicted of felony tax fraud and ordered to pay a $520,000 civil judgment for soliciting donations to allegedly bogus charities.

    Weingarten and his wife, Rivka, are alleged to have been the biggest beneficiaries of the scheme and are, under the judgment. About $360,000 of the funds from the judgment will go to two Israeli charitable organizations that carry out genuine programs similar to the causes for which Weingarten’s fraudulent solicitations raised donations.

    “We are committed to fighting to protect everyday New Yorkers, particularly those who want to use some of their hard-earned money to support charitable causes, because there has to be one set of rules for everyone,” New York Attorney General Eric Schneiderman said. 

    According to the suit filed by Schneiderman, Weingarten and his associates raised donations for 19 sham charities from Jewish donors throughout North America, ostensibly for Israeli charitable causes such as emergency medical services and programs for sick children, terror attack survivors, cancer victims, and the poor.

    Money withdrawn

    Large amounts of the money raised -- an estimated $2 million -- was then withdrawn from charity bank accounts. Some of that money was used to pay workers operating Weingarten’s Brooklyn telemarketing boiler room. Other funds were used by Weingarten and his family to pay for personal expenses, such as mortgages, dentist bills, car loans, and home improvements.

    The complaint also detailed gross mismanagement of charitable assets by Weingarten, including extensive mixing of charitable and personal funds and of funds raised for one charitable cause with those raised for another, which is barred by law.

    New York State Commissioner of Taxation and Finance Thomas H. Mattox said, “The defendant not only stole donations for charitable organizations, he also committed criminal tax fraud by failing to report income on his tax returns. Tax theft is a crime against all New Yorkers, and we will continue to work with the Attorney General and other levels of law enforcement to investigate and prosecute such perpetrators.”

    © igor - Fotolia.comA New York man, Yaakov Weingarten, has been convicted of felony tax fraud and ordered to pay a $520,000 civil judgment for ...

    New York State cracks down on charity scam

    Money donated to disabled veterans lined the fundraisers' pockets instead

    The main problem with donating to charity is that the world is full of scam artists happy to falsely pose as a charity in order to collect your “charity budget” for themselves. Other scam artists will collect money in the name of legitimate charities but keep the lion's share of donations for themselves, rather than give it to the charity in question.

    It's bad enough that the New York State attorney general's office has a “Charities Bureau” dedicated to investigating such things, and on July 1 the Charities Bureau reached a $24.6 million settlement with two for-profit direct mail vendors, Quadriga Art and Convergence Direct Marketing, over collections they made on behalf of the  (DVNF).

    Attorney General Eric Scheniederman said in a July 1 press release that:

    “This investigation sheds light on some of the most troublesome features of direct mail charitable fundraising as it is practiced in the United States today …. Taking advantage of a popular cause and what was an unsophisticated start-up charity, these direct mail companies used cleverly designed but misleading mailers to raise tens of millions of dollars in donations from generous Americans, nearly all of which went to the fundraisers and their agents, and left the charity nearly $14 million in debt. Charities and their fundraisers that rely on direct mail campaigns can and must do better -- and this settlement is an important milestone on the path forward.”

    $10 million

    The settlement requires Quadriga to pay $9.7 million in damages, forgive $13.8 million in debt that DVNF owed it, and pay the state of New York $800,000 to cover costs. Convergence, meanwhile, will pay $300,000 in damages.

    The two companies also must pay $10 million to assist the disabled veterans who were supposed to have been helped by the monies donated to DVNF.

    Although Schneiderman's investigation naturally focused only on problems in New York State, the settlement is likely to have repercussions nationwide.

    CNN started investigating Quadriga in 2010 (and took credit for Schneiderman's later interest in the company), saying that since 2008, Quadriga had raised $116 million on DVNF's behalf – with $104 million of that going right back to Quadriga – and what donations did trickle through to DVNF were for the most part useless.

    In 2011, for example, DVNF made donations to St. Benedict's, a small veterans' charity in Alabama, after devastating tornadoes swirled through the region. St. Benedict's director J.D. Simpson, in 2012, told CNN what sort of donations they actually received:

    "They sent us 2,600 bags of cough drops and 2,200 little bottles of sanitizer," J.D. Simpson told CNN. "And the great thing was, they sent us 11,520 bags of coconut M&M's. And we didn't have a lot of use for 11,520 bags of coconut M&M's. "

    What to do

    Incidentally: if you want to donate to a charity, whether a home for disabled veterans, domestic-violence victims or anything else, the best thing to send is cash, not stuff — on the off-chance your charity of choice actually thinks “Y'know, it sure would be helpful if we had 2,600 bags of cough drops and a truckload of coconut M&Ms,” they're still better off receiving money which they can then use to buy the cough drops and coconut candy.

    The same holds true for “short-term” charities: if a natural disaster hits a given region, and people there need clothes and blankets, the best thing to do is send money, because charity workers and volunteers don't have time to sort through piles of donated fabric items to determine what's worth keeping or who it should go to.

    The main problem with donating to charity is that the world is full of scam artists happy to falsely pose as a charity in order to collect your “char...

    Watch out for mudslide relief scams

    Scam artists are profiting on others' misfortunes

    When disaster strikes, you can be sure that scam artists will be close behind. The latest example is the massive mudslide in Washington State. 

    Everyone would like to help but Washington Attorney General Bob Ferguson warns that rip-off artists are already out in force.

    “All of us in Washington and around the country have deep sympathy for the victims and their loved ones and friends at this tragic time,” Ferguson said.

    “It is a natural instinct to want to provide assistance right away, but ... I advise potential donors to exercise caution and make sure their hard-earned dollars go for the purpose intended, not to line the pockets of scam artists.”

    Secretary of State Kim Wyman added: “Our hearts go out to everyone affected by this horrific mudslide. So much was lost by so many. I’m heartened that many Washingtonians have a strong impulse to be a part of the relief effort, at least financially, and to help the victims of this tragedy. I support that, obviously.

    “But as the Attorney General and I continue to emphasize in times like these, sadly there always seem to be rip-off artists who take advantage of people. It is shameful, but some so-called charities take advantage of our generous nature. I want people to donate to charities they know and trust, if that’s their desire, and I want no one’s money used to simply line some con-artist’s pocket.”

    Here are some tips to help you avoid being taken in by phony appeals:

    • Be suspicious of solicitors requesting immediate donations. Don’t rush decisions and consider contributing at give.org, a website run by the Council of Better Business Bureaus.
    • Make sure that charities are qualified to provide the type of disaster relief that is necessary.
    • Avoid cash donations. Write a check directly to the charity, not the fundraiser.
    • Never give out credit card numbers over the phone.
    • Be wary of “new” charities with unverifiable background information.
    • Watch out for solicitations from fake “victim” or memorial social media accounts.
    • Don’t be fooled by a name. Be watchful of charities that use sympathetic sounding names or names similar to well-known legitimate charities.

    When disaster strikes, you can be sure that scam artists will be close behind. The latest example is the massive mudslide in Washington State. Every...

    Charities: The good, the bad, the scams

    There are many worthy causes out there but how do you identify them?

    Pete Thomson is President/CEO of McQ Media Inc, a media and advertising firm based in Dallas, Texas.   Thomson’s weekly radio program, The Consumer Team, airs on CBS Radio’s KRLD Radio in Dallas, Texas.

    ---

    During the holiday season, many Americans open up their wallets to support a favorite charity. From local non-profits to major national charities with $1 million-plus advertising budgets, the non-profit landscape is more crowded and competitive than ever.

    Just how important are the holidays to your average charity? Non-profits will often admit that over half of all their contributions are received in the fourth quarter, with much of the money being received in December.

    Largely because of the strategically crafted marketing campaigns, it’s easy to assume that non-profits are good managers of the money we give them. The images of hungry children being fed or other acts of kindness that result from a donation are indeed powerful. Yet, the reality in today’s marketplace is that a high percentage of non-profits are not effective at managing the donations they receive. 

    Some of the biggest, most reputable-appearing non-profits and ministries that dominate television and radio make big promises in their marketing.  However, in many cases, a relatively small percentage of donations actually reaches the needy.  In the case of many of the web-based charity campaigns, little or no money is going to the cause that is advertised. 

    Like the Wild West

    Charities and ministries that were founded with a mission of helping people, can lose focus of their foundational purpose because of the jaws of overhead.   CEO and leadership salaries, marketing and other infrastructure expenses can easily turn even the best-intentioned non-profit into an organization that is overtaken with the costs of doing business.  

    Thanks to several charity watchdog groups, consumers now have access to reliable and unbiased information regarding charities. Charity Navigator is a New York based non-profit that rates non-profits in a number of key criteria. The Evangelical Council for Financial Accountability (ECFA) offers a similar service which rates Christian charities.

    Sandra Miniutti, VP/CFO at Charity Navigator, says that donors need to be very careful before giving money to a charity. She said, “There’s a lot of scoundrels and thieves out there. There are more than a million public charities in America today. The IRS is charged with overseeing them at the federal level and there’s very little oversight. It’s a little like the Wild West and donors need to dig deeper into a charity’s performance before they hand over their hard earned money.”

    Financial transparency, according to Miniutti, is an important cornerstone to responsible non-profits. Ms. Miniutti indicated that many non-profits open their books to donors and the general public. Such transparency gives donors a way to confirm that their gifts are being utilized appropriately.

    Lack of transparency

    Still, a number of non-profits don’t open their books to the public. Many of these, according to Miniutti, are faith-based non-profits that are not required to share financial information. One such faith-based charity is The Salvation Army. Miniutti said that she finds The Salvation Army’s lack of financial transparency troubling.

    If a group is considered a house of worship by the IRS then we’re not able to rate it. And believe it or not, that includes The Salvation Army takes that exemption," she said. "They don’t have to file any financial data with the IRS so we can’t get access to data to evaluate them. We’ve asked them many times to share the data with us and they’ve refused to do so. We’ve found other religious groups that have the exemption with the IRS that will still provide us the data because they know that it’s important to their donors to see how they’re performing financially and to prove that accountability and transparency piece to them.”

    Beyond financial transparency, consumers should look at other financial data to ensure that a charity is using donations responsibly. Overhead should be measured as a percentage of total gifts received. According to Miniutti, the most responsible charities keep overhead to less than 25% of total cash gifts received. Another area to analyze is charity CEO salaries, which Miniutti says should be in line proportionately with the size of the non-profit.

    Cost of acquisition

    The cost of donor acquisition is important because it measures how much a charity pays to third parties for delivering new donors. Radio stations, for example, will sell non-profits large advertising campaigns which are designed to recruit new donors. Charities and media companies attempt to justify the process of charging nonprofits to raise money because the marketing campaigns generate new, incremental donors for a non-profit.

    But according to Miniutti, such marketing campaigns cut into charity operations and efficiency: “Anytime there’s a middleman involved, whether it be a telemarketing firm or a radio station trying to take a piece of the pie, that’s very disturbing. The truth is giving doesn’t change much in America from year to year. And if some of that money is evaporating into for profit companies, then the charitable sector has less to fulfill their worthy mission.”

    What to do

    In spite of the bad charities and scams, it is possible to connect with worthy non-profits. Here are some suggestions.

    Use The Watch Dogs  Tap into the vast resources of the charity watch dog organizations we’ve cited. Their services are free and can offer important information.

    Don’t Give to Door-to-Door Solicitors Because fake credentials and even uniforms can be easily produced, avoid giving to any charity that comes knocking on your door. Be especially wary of the local organizations with volunteers soliciting for funds on street corners. Charity Navigators generally gives low marks to police and fire fighter charities.

    Delete Charity Emails Unless you have an established relationship with a charity that you’ve first initiated, consider all the email solicitations to be bogus.  Even emails that appear to be from a major charity are often a front for a scam, often located off-shore and out of reach of US laws.

    Charity Scams Target Older Givers  Older people sadly often fall victim to charity scams.   Their general lack of sophistication with email (see email scams above) combined with isolation and their generosity makes for a perfect profile for the bad guys to go after.   Take time to make sure that the seniors in your life become well informed about charity and non-profit scams.

    Charity scams will only get more sophisticated and effective in the future.  Indeed, high technology has given the bad guys a new platform to operate in with great anonymity.  Because of this, consumers need to be even more vigilant in our efforts to separate the good from the bad.    Giving to reputable and responsible charities can truly impact the lives of hurting people.   Before giving, do your research to make sure your dollars are being used wisely.

    During the holiday season, many Americans open up their wallets to support a favorite charity. From local non-profits to major national charities with $1 m...

    Beware of post-disaster charity scams

    Oklahoma tragedy likely to draw out fake charities

    Following disasters like the Oklahoma tornado, scam charities are quick to exploit the tragedy and misery, cynically tugging on heartstrings to line their own pockets. Consumers everywhere should be on guard.

    “For those folks around the country who want to donate funds to help families in Oklahoma, please be alert and only donate to reputable relief charities such as the Salvation Army or the Red Cross," said Oklahoma Attorney General Scott Pruitt. "The first scam we typically see after devastation like this is charity fraud."

    Scam operators may come at you a number of different ways. They may operate bogus charities that contact people by telephone to solicit money or financial information. Potential victims might receive an email to steer them to bogus websites to solicit funds, allegedly for the benefit of tragedy victims.

    Sometimes these fraudulent websites are hard to distinguish from those of of legitimate charities. Sometimes they adopt a name that sounds familiar, similar to a charity you've heard of.

    Identity theft

    Sometimes they're after more than a simple donation. Sometimes they want your identity. After obtaining your personal information, they may clean out your bank account or open credit accounts in your name.

    On its website the Internal Revenue Service (IRS) has an Exempt Organizations Select Check tool. You can use it to identify qualified charities. Only donations to qualified charitable organizations are tax-deductible. 

    You can also find legitimate charities on the Federal Emergency Management Agency (FEMA) Web site.

    Iowa sting

    Iowa Attorney General Tom Miller has waged a lengthy and successful campaign against questionable charity fundraisers who call residents of his state. He recently obtained a court order barring a Florida telemarketer from operating in Iowa.

    In an ongoing sting operation, Miller obtained the Des Moines telephone number of an elderly resident and set it up with a recorder and one of his officers. When the telemarketer, claiming to be from A Child's Dream Foundation, called with its pitch, Miller recorded it and presented it as evidence. The audio of the call, posted on Miller's website, serves as a good example of how these pitches work. 

    The telemarketer was Telequal LLC. Its representative “outright lied” in the call, Miller said.

    “She said she was calling from the charity, claimed that the charity focused primarily on sick Iowa kids, and also claimed that a lot of each donation went to the kids,” Miller said. “In truth, the call was coming from Telequal. They were asking for money for an out of state charity that has no special Iowa focus, and 85% of every dollar donated went to the telemarketer, not to sick kids.”

    What to do

    Never respond to charity appeals from telemarketers. Legitimate charities don't work that way.

    Contribute only to established, reputable charities. In the case of the Oklahoma disaster, the state's attorney general has suggested the Red Cross or Salvation Army.

    Never contribute cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.

    If you suspect fraud, report it to you state attorney general's office.

    Following disasters like the Oklahoma tornado, scam charities are quick to exploit the tragedy and misery, cynically tugging on heartstrings to line their ...

    Be careful about charitable appeals tied to the Boston Marathon bombing

    Bogus requests following tragedies spring up like dandelions in the spring

    Tragedy often brings out the best in people.

    As we saw in Boston earlier this week, people ran toward the blast site, putting themselves at risk, trying to help bombing victims in any way they could.

    Unfortunately, it also brings out the worst, with the scammers crawling out from under their rocks to take advantage of the situation.

    This is prompting numerous warnings, including one from Oregon Attorney General Ellen Rosenblum, to watch out for phony charities soliciting funds for the victims.

    Exploiting disasters

    The lowlifes employ many tools to exploit disasters for personal gain. News accounts note that a fake Twitter account appeared almost immediately after the bombings in Boston. This scam, called @_BostonMarathon, offered to donate $1 for every retweet. It was quickly suspended after users warned the account was fake.

    “Scammers came out in force after the 9/11 terrorist attacks, after Hurricane Katrina, and after Superstorm Sandy,” said Ellen Klem, director of consumer outreach and education in the Oregon AG's office. “They’ll try once again after Monday’s senseless bombing. Don’t let them prosper off the tragedy. Be generous, but skeptical.”

    Tips for charitable giving

    When considering a donation, consumers should keep the following in mind:

    • Do not give out personal information such as credit card or bank account numbers over the phone.
    • Checks should always be made payable to the organization not the person collecting the donation.
    • Beware of callers who want your money fast. When solicited by phone, always ask the caller to send you written materials about the charity. No legitimate organization will insist that you donate immediately
    • Do not donate cash. Legitimate charities will be pleased to receive a contribution by check. Don’t send contributions with a “runner,” by wire or overnight parcel pick-up service.
    • Be sure you are contributing to a legitimate organization. You can do this by visiting www.guidestar.org, a national clearinghouse of information about charities and their performance.
    Tragedy often brings out the best in people. As we saw in Boston earlier this week, people ran toward the blast site, trying to help bombing victims in an...

    California Lists Activities of Commercial Charity Fundraisers

    States moves for more transparency in fundraising

    It's not against the law to earn a profit by soliciting money for charity. But consumer advocates say there needs to be more transparency, so potential donors know how much of their contribution goes to the cause and how much goes to the fundraiser's bottom line.

    Toward that end California Attorney General Kamala Harris has released a report on the activies of commercial fundraisers in the state. Her data shows that for-profit fundraisers in California raised $362.9 million in 2010, of which charitable organizations received less than 45 percent.

    This represents an increase from the 2009 total of less than 43 percent. The data is included in the California Department of Justice's Annual Report of Commercial Fundraisers, produced by the Charitable Trusts Section.

    "The data in this report allows donors to make informed choices this holiday season," Harris said. "Commercial fundraisers play a role in supporting charities in California, but it's important for donors to know how much of their money will be used to support the charity's programs, and how much will go to fundraising expenses."

    Charities that hire fundraisers

    Among numerous other tables, the annual report contains an alphabetical list of charities that hired commercial fundraisers in 2010 - along with the total revenue raised in those campaigns and the dollar amount and percentage of total funds raised that went to the charity.

    Commercial fundraisers, who are hired by charities to raise money on their behalf, typically charge a flat fee for their services or a percentage of the contributions they collect.

    By law, commercial fundraisers must register with the Attorney General's office prior to fundraising in California and must file annual financial disclosure reports detailing income and expenses for each fundraising campaign.

    According to reports filed with the Attorney General's office, commercial fundraisers collected $362.9 million in donations in 2010. On average, $161.1 million - or 44.38 percent of the funds raised - went to the charities. The remainder was retained by the commercial fundraisers as payment of fees and expenses.

    When asked by a solicitor to make a donation, the American Institute of Philanthropy suggests consumers follow these steps:

    • Ask the solicitor how a donation will be distributed.
    • Ask what percentage of donations will be used to pay for fundraising expenses.
    • Ask if the solicitor works for a commercial fundraiser and is being paid to solicit.
    • Avoid cash donations.
    • Avoid giving credit card information to a telephone solicitor or in response to a telephone solicitation.
    • Learn about a charitable organization, its activities and its fundraising practices before giving.  
    California Lists Activities of Commercial Charity Fundraisers...

    Oregon Sues Veterans 'Charity,' Says Founder Diverted Funds

    Oregon War Veterans Association also made illegal political contributions, suit charges

    Oregon Attorney General John Kroger has filed a lawsuit alleging that the founder of two charities personally kept at least $690,000 of funds raised to help Oregon veterans and improperly used charitable donations to make unreported political contributions.

     “The Department of Justice is committed to cracking down on charities that misuse donations raised to benefit veterans, law enforcement and other worthy causes,” said Keith Dubanevich, Chief of Staff and Special Counsel to Attorney General Kroger. “Oregonians deserve absolute assurances that their generous charitable contributions are spent properly.”

     The lawsuit was filed today in Marion County Circuit Court against Gregory Warnock and corporations he founded: the Oregon War Veterans Association (OWVA) and Military Family Support Foundation.

    The suit alleges that Warnock falsely claimed that Military Family Support had been granted charitable status by the IRSand that donations to it were tax-deductible. In fact, the suit alleges, Military Family Support was little more than a corporate shell that Warnock used to solicit donations that he transferred to himself or entities under his control. 

    Warnock also allegedly allowed OWVA to make unreported political contributions and represented that donors could claim a charitable tax deduction for contributions intended to be used for political purposes, which is contrary toOregons campaign finance laws, Internal Revenue Service regulations and OWVA’s status as a charitable, public-benefit corporation. 

     The lawsuit seeks, among other things, an order shutting down OWVA and preventing Warnock from operating charities in the future.  Attorney General Kroger also is demanding that Warnock repay amounts he impropertly diverted so the funds can be distributed to charitable organizations that provide assistance to veterans.

    The lawsuit is part of Attorney General Kroger’s ongoing initiative to crack down on non-profits and fundraisers that fraudulentlyclaim to help U.S.veterans.

    Oregon Sues Veterans 'Charity,' Says Founder Diverted Funds. Oregon War Veterans Association also made illegal political contributions, suit charges....