Monday, September 22, 2008

Steer clear of hurricane charity scams

WASHINGTON (9/22/08)--Recent hurricanes spawned a new crop of crooks who created bogus fund-raising operations, according to the Federal Trade Commission. Know how to distinguish bad guys from legitimate charities as you dig deep to help those affected by recent disasters.

At first, these bogus charities look legitimate and even may contain similar names to organizations you're familiar with. Some fraudsters show up at your door, set up a table at the mall, send you an e-mail message, or call you at home.

The Federal Trade Commission and offer advice to make sure your donation dollars benefit the victims rather than line the pockets of scam artists:

Put up your guard before you pull out your wallet. Crooks time their appeal to coincide with hurricanes and other natural disasters. Don't be swindled by a look-alike scam. A safe bet--if you want to give to a legitimate charity--is to stick with a familiar organization like the American Red Cross.

Check it out. If you're not sure whether an organization is legitimate, take time to investigate. The Better Business Bureau Wise Giving Alliance rates more than 600 different charities. Visit or call 703-276-0100.

Ask about administrative costs. The Better Business Bureau suggests giving to charities that allocate at least 65% of your donation to help victims. If administrative costs are higher than 35%, you may wish to donate elsewhere. And if the organization claims to allocate 100% of your donation to help victims, this is a red flag. All organizations have some fund-raising and administrative costs.

Be cautious when giving online. Phishers--who want to trick you into handing over personal and account information online--can create organizations overnight that sound legitimate. Do your research, particularly before providing payment information.

Write a check. Cash is easily lost or stolen, and you should never give credit card or account information unless you're sure the organization is legitimate. A check provides you with a record of your donation, but make the check out to the beneficiary, not the solicitor.

Get a receipt. Make sure it states that your contribution is tax-deductible.

For more information, watch the video, "Phishing: Don't Take the Bait," in Home & Family Finance Resource Center.

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