Haiti disaster brings out charity scams
How to be sure your donation goes to the right place
By Martin Merzer | Published: January 14, 2010
The devastation is complete, the magnitude of human suffering incomprehensible, the needs immense. The people of Haiti, victims of serial disasters in recent years that now pale in comparison to Tuesday's powerful earthquake, urgently need your help.
But be careful, especially if you are about to make a donation using your credit card. Experts say scammers already are at work -- and you must not allow your heart to get ahead of your head.
Their top three tips:
- When it comes to your credit card number, don't let your guard down, even in response to a disaster as mammoth as the Haitian earthquake and situations as dire as those confronted by survivors. Never give out your credit card number or other personal information to people who reach you through unsolicited telephone calls. Keep in mind that we all remain vulnerable to identity theft.
- Funnel your donations through major, well-known relief organizations -- and, if you are doing this over the Internet, make sure that the link really connects to that group. Verify the legitimacy of charities by using websites such as the Better Business Bureau's Wise Giving Alliance, which provides a robust portfolio of tools for donors, Charity Navigator.org or the American Institute of Philanthropy, which has compiled a list of recommended Haitian relief organizations.
- Do not respond to unsolicited e-mails -- and never click on a link that is included in such an e-mail. If you believe that you or others have been victimized by an online scam related to the Haitian disaster or any other event, federal authorities urge you to file a report with the Internet Crime Complaint Center.
The importance of these tips (more follow below) cannot be overemphasized, especially now and in coming weeks, as the full extent of the ruin and agony in Haiti becomes known -- and as scammers elevate their efforts to prey on well-intentioned donors.
One leading indicator: The FBI said it began receiving reports of suspicious activity within hours of the first reports of Tuesday's earthquake. Another indicator: Thousands of people were defrauded by bogus "charities" in the wake of Hurricane Katrina's assault on New Orleans in 2005.
Past tragedies and natural disasters have prompted individuals with criminal intent to solicit contributions purportedly for a charitable organization and/or a good cause.
|-- FBI warning|
"The FBI today reminds Internet users who receive appeals to donate money in the aftermath of Tuesday's earthquake in Haiti to apply a critical eye and do their due diligence before responding to those requests," the agency said in a statement.
"Past tragedies and natural disasters have prompted individuals with criminal intent to solicit contributions purportedly for a charitable organization and/or a good cause."
The Better Business Bureau's Wise Giving Alliance, several state attorney generals and consumer advocates have also sounded similar warnings.
"Not only do Americans need to be concerned about avoiding fraud, they also need to make sure their money goes to competent relief organizations that are equipped and experienced to handle the unique challenges of providing assistance," said Art Taylor, president and chief executive officer of the Wise Giving Alliance.
Said Stephen Brobeck, executive director of the Consumer Federation of America, which represents 280 national, state and local consumer organizations: "Only give to charities you know well and trust."
Zero liability on charitable giving
Putting a charitable donation on a credit card is relatively safe, according to Lauren Bowne, a staff attorney for Consumers Union, which created a website to guide potential donors to Haitian relief.
"As with all online credit card purchases, if you use your credit card to donate to an organization that you believe is legitimate and the organization is a fraud, you have zero liability," she said. "Contact your bank immediately upon discovering the fraud."
"That being said, losing money isn't the only thing at risk when online scamsters are at work," Bowne said. "The hassle of getting reimbursed from the card company and closing your accounts, along with the potential for identity theft, means you should always take precautions.'
For that reason, credit card issuers also went on alert and urged their customers to do the same.
"We would simply encourage consumers to do their due diligence and only contribute to organizations with a strong track record of supporting those in need," said Paul Hartwick, a spokesman for JPMorgan Chase, one of the nation's largest issuers of credit cards.
Card issuers don't solicit donations
Matt Towson, senior manager of community affairs and media relations for Discover, reminded consumers that "Discover and credit card companies in general never send you e-mail alerts or call you to solicit funds."
It is important to recognize that no one is trying to discourage contributions to legitimate relief groups. In fact, Chase and Bank of America each swiftly committed up to $1 million to immediate and future recovery efforts in Haiti.
"Our hearts and prayers go out to those whose lives have been devastated by this natural disaster," James Dimon, Chase's chief executive officer, said in a note to his employees. "Please join me in making a gift to help meet the urgent needs of Haiti's earthquake survivors."
"Many of our associates, particularly in the South, have family and friends who were impacted by this disaster," said Anne Finucane, Bank of America's global chief strategy and marketing officer. .
|AFTER LAWMAKERS NUDGE, CREDIT CARD PROCESSORS WAIVE CHARGES ON HAITI DONATIONS|
Under pressure from lawmakers, the four firms that process nearly all credit card transactions in the United States agreed to waive their usual transaction fees on charitable donations to aid Haiti eartquake victims.
Usually, credit card processors charge an interchange fee of 1 percent to 3 percent on every transaction. On Jan. 14, Rep. Betsy Markey (D-Colo.) and Sen. Christopher Dodd (D-Conn.) both appealed to the card issuers to pass on 100 cents on the dollar for donations to help Haiti.
"Across the country, Americans are offering their hard-earned dollars to aid the Haitian people, but their donations could do more if credit card companies weren't skimming off the top," Dodd said.
"This is one thing credit card companies can do that will make a big difference in the lives of people in urgent need," Markey said.
In the space of 24 hours, MasterCard, Visa, Discover and American Express all agreed. They all said they would waive fees for a limited time, to specified charities. "Americans are opening their hearts to help the victims of this terrible tragedy, and we want to ensure that their contributions go as far as possible," said Chris McWilton, president, U.S. Markets, MasterCard Worldwide.
The firms also pledged other aid, including cash donations and offering to match donations made by their employees.
Here, from the FBI, the Better Business Bureau and other authorities are additional tips to help you distinguish between legitimate charities and the leeches who seek to capitalize on the suffering of others:
- Financial assistance -- preferably in the form of credit card charges or checks, rather than cash -- tends to be more effective than gifts of clothing, food or other physical items. Logistical challenges in the wake of a disaster such as the Haitian earthquake can keep so-called "in-kind" donations of food, clothing and equipment stacked up far from the point of need. So, it is far better to donate money to legitimate charities that are positioned to wisely use the funds -- but, again, it is necessary to do that carefully.
- Being positioned to use the funds in a wise and timely manner depends, in part, on the extent to which a charity has an on-the-ground presence in Haiti or any other area impacted by a disaster. See if the charity's website or other promotional material clearly and convincingly describes their ability to deliver timely relief.
- Try to give money directly to the relief organizations that will use it. Passing your contribution through a group that serves as a middleman could delay use of the money, risk siphoning off some of your donation to that middleman or, in a worst case, have it entirely lost to a bogus operation.
- At the same time, be wary of groups that claim to pass along 100 percent of your contribution to needy victims. That could be a warning sign because all legitimate charities bear fundraising and administrative costs -- and credit card donations involve a processing fee. One rule of thumb: As a general guideline, at least 60 percent of a charity's funds should go to programs or services.
- If you have time, you can learn much more about a charity by asking to see its Form 990, a financial report that the federal government requires all charities to file (except churches, synagogues and other places of worship). The report will give you considerable insight into how the group raises and spends its money, and who sits on its board of directors.
- Be skeptical of individuals representing themselves as surviving victims or officials asking for donations through social networking sites.
- Be cautious of e-mails that claim to show pictures of the disaster areas in attached files because the files may contain viruses. Only open attachments from known senders.
- Be wary of groups that launch campaigns dominated by emotional, sentimental appeals but seem short on details about how your donation will be spent.
"It is best to not respond to high pressure or emotional appeals," the American Institute of Philanthropy warned shortly after the Haitian earthquake struck. "Do not let yourself be pressured into contributing over the phone. If you are not familiar with a charity, request detailed information in writing. You have a right to say no."
See related: Giving charity gift cards? Mind the fine print
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- Suspect card fraud? How to file a claim – What to do when you spot a suspicious charge on your credit or debit card ...