Eight Ways to Avoid Getting Scammed

You will undoubtedly receive a call from a charity asking for donations. You might hear a sad story about children struggling with cancer or abused animals about to be euthanized.

Giving to others boosts your levels of feel-good brain chemicals. As many scientists have seen in various studies, altruism is a building block for happiness. And, of course, it can provide significant tax benefits.

But before you give, be wary… That plea for money could be a scam.

This past May, the Federal Trade Commission (FTC) charged four well-known charities with fraud – one of the largest scam-charity takedowns ever.

Together, the Cancer Fund of America, Cancer Support Services, Children's Cancer Fund of America, and the Breast Cancer Society took more than $187 million from consumers that did not make it to cancer patients. That money went to CEO bonuses, luxury vacations, cars, concert tickets, even dating-site membership fees.

These four charities aren't alone, either…

Two years ago, the Tampa Bay Times released a shocking investigative report on the 50 worst charities in the U.S. These companies give little, if any, money directly to the people they represent. In some cases, the charities used less than 1% of donations to provide direct aid.

So before you crack open your checkbook this month, follow our eight steps to protect yourself from scams and make the most out of your gifts.

At a Glance

  1. Four Charities: $187 million, never made its way to cancer patients.
  2. Worst 50 charities investigated give little, if any, money directly to the people they represent.
  3. Many charities give less than 1% of donations to provide direct aid

Contacts

  1. Set a limit. If you want to give this year, look over your spending and set aside what you want to donate. This will stop you from caving in every time you get a soliciting phone call.
  2. Stop the calls and junk mail. Register for the FTC's National Do Not Call Registry. It's free and will take you off of telemarketers' lists within about a month. You can register at www.donotcall.gov. There's also the Direct Marketing Association's list to stop unsolicited mail. You can request to get off the mailing list at www.dmachoice.org, but it only takes you off the lists for the companies that are registered. You can read more at the FTC's website.
  3. Don't let your memory fool you. One tactic some scammers use is to call and say you've already made a pledge. Then they try to collect. This time of year, with so many people asking for money, you might doubt your memory and think you did in fact make a pledge you never made. Fraudsters target older folks with this type of tactic, hoping they have poor memories. Keep a list of every donation you've made or promised to make. Having this sheet handy can let you know at a glance if they're telling the truth.
  4. Do your research. If you haven't heard of the charity, take some time to research it. Websites like Charity Navigator,Charity Watch, and GuideStar have hundreds of charities in their databases. Take the time to see if your dollars will really go to those in need.
  5. Get the tax ID number. Not only will this help you keep track during tax time, it will also help you to identify scams. If someone calls you asking for a donation, get the tax ID number. If they can't give it to you, don't give them any money. Likewise, if you get something in the mail, call them and ask for the tax ID number.
  6. Don't give too much information. Charities don't need things like your Social S ecurity number in order to process a donation. And never wire money directly to a bank account… That's a sure sign of a scam.
  7. Keep track of those clothes, too. If you're giving clothes or home goods away to charities like Goodwill Industries or the Salvation Army, make sure to get a receipt. And if you schedule a home pick-up, make sure it's through a reputable group (like Vietnam Veterans of America).
  8. Go local. If you still feel overwhelmed by all the big charities, try supporting local causes. That way you know exactly where your money is going and that it will directly help those in your community.