When disasters hit, charity scams follow

Here’s the latest post-disaster weather forecast: Expect an avalanche of fake-charity scams in the wake of Hurricane Harvey’s devastation along the Texas coast, in Houston and now in Louisiana.

Natural disasters often inspire people to donate money to relief efforts. But where money flows, con artists routinely pop up and establish fraudulent charities to accept donations from unsuspecting donors.

Officials in Texas, Louisiana and at the Federal Trade Commission have already issued warnings for people to be vigilant about charity scams expected in the wake of Hurricane Harvey.

Experts say the best advice for people wanting to help is to:

• Donate to charities you know and trust with a proven track record with dealing with disasters.
• Be skeptical of pitches from groups you have never heard of, that refuse to provide you with documentation that proves who they are, or that seem to have sprung up overnight in connection with current events.
• Check out the charity with the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, CharityWatch, or GuideStar.
• Designate the disaster so you can ensure your funds are going to disaster relief, rather than a general fund.

“When there is a disaster that is highly publicized, people want to help, but sometimes they let their emotion guide them rather than their brains,” says Daniel Borochoff, president and founder of CharityWatch, which evaluates charities on behalf of donors.

There are plenty of government agencies and watchdog groups that help deter scammers. State attorneys general and the FTC typically send out lists of tips to avoid getting conned and set up hotlines to report suspicious requests for charitable giving. They also advise being wary of contractors who move in after a disaster to assist with home repairs.

Burden falls on you
But with so many ways to communicate nowadays – such as with smartphones and social media – much of the burden to avoid fake-charity scams falls on individuals. For instance, donating via text messaging is becoming more popular, because people perceive it as being easy and quick. But verifying who gets the money when you text is trickier than donating by credit card or check.

Social media could also be a charitable landmine, Borochoff says, because people might pass along information to friends without anybody vetting it.

“People make the false assumption that something is legitimate because they get it passed on from a friend, who was duped,” he says.

Katherine Hurt, spokeswoman with the Council of Better Business Bureaus, says scammers have evolved to incorporate new technologies.

“It’s gotten more sophisticated,” she says. “It’s really easy to create a real-looking charity. You can have a sophisticated website, robocalls, all kinds of things that look like a real charity and sound like one.”

For example, after a tornado hit Joplin, Missouri, in May 2011, killing 158 people and destroying more than 7,000 homes, Missouri’s attorney general sued a Puerto Rican organization called Alivio Foundation Inc., which he said fraudulently solicited donations on its website using PayPal.

The foundation claimed the donations would be used to assist survivors and relatives of tornado victims in conjunction with St. Peter The Apostle Catholic Church and Catholic Charities of Southern Missouri, the attorney general’s office said.

But neither the church nor Catholic Charities had ever heard of the Alivio Foundation. The company had received nearly $10,000 in donations intended for tornado victims.

The Missouri attorney general also sued an internet radio personality in Georgia who raised nearly $5,000 by selling “Storm-Aid” T-shirts and setting up benefit concerts aimed to help tornado victims. The money never went to tornado victims, the suit alleged.

Missouri won judgments in both cases.

Take the time to use your head
Lindsay Nichols, vice president of marketing and communications at America’s Charities, says the critical step in donating to help after a natural disaster is not acting in haste. Resist any high-pressure tactics or requests for cash now.

“The process to make sure they’re not giving to a scam is taking a few minutes to research,” she says.

Even using a search engine such as Google or Bing can go a long way toward answering key questions, such as: What charities are doing relief work in this area? Where is help needed most?

A charity’s website might also include an annual report, which offers details about its programs and its mission. People can evaluate those to ensure their money is headed where they want it to go.

“They should say clearly what they do,” she says. “If you don’t understand it, don’t give to it.”

And in the end, she says, the decision on whether to give should come down to a gut feeling.

“Trust your instincts,” Nichols says. “If it doesn’t feel right, don’t do it. If you don’t feel good about it, there are too many nonprofits out there that would make you feel good about your donation.”

See related: Pre-dissaster financial preparedness checklist (PDF), 6 ways to protect your credit after a natural disaster