Fraudulent Charity Scams | 7 Major Red Flags

Fraudulent charity scams are a major problem in the U.S., particularly around holidays and after major disasters. These scams prey on people’s generosity by imitating real charities or inventing heartbreaking stories.

The fraudsters operate across all channels, including phone calls, email, social media, and even door-to-door soliciting.

5 Common Types of Fraudulent Charity Scams

Scams generally fall into two categories: completely fake charities that steal all the money, or “bad actors” that are registered but spend almost all donations on fundraising and administrative costs.

1. Disaster Relief Scams:

   • These are the most common scams tied to current events. After a hurricane, earthquake, mass shooting, or major local fire, scammers quickly set up fake websites or crowdfunding pages (like GoFundMe) with pictures of the event.

2. Impersonation/Copycat Scams:

   • Scammers use names extremely similar to well-known, reputable charities to confuse donors.
     • Example: A scammer might use a name like “Cancer Fund of America” which sounds like the American Cancer Society, but directs almost all funds to professional fundraisers.

3. Local Hero/Public Service Scams:

   • These calls claim to be raising money for local groups that are highly respected.
     • Examples: “Police Officer Support Fund,” “Local Firefighters Association,” or “Disabled Veterans Fund.” A portion of the money might go to an organization, but the vast majority is kept by the telemarketers.

4. Tax Deduction Scams:

   • They pressure you to donate before the end of the year and guarantee that your donation is tax-deductible, even if the organization is not an official 501(c)(3) nonprofit, or if they refuse to provide a tax receipt.

5. Social Media/Crowdfunding Scams:

   • Individuals post fake stories of personal tragedy (a sick child, house fire, etc.) on platforms like Facebook or GoFundMe. The story and photos may be real but stolen from legitimate sources, or entirely fabricated, and the money goes directly to the scammer.

7 Major Red Flags to Spot a Scam

A legitimate charity will never do these things:

Also Read : How To Stop Scam Likely Calls

How to Verify a Charity Before Donating

Never click a link or give money on an unsolicited call. Instead, take a few minutes to check their status using these independent resources:

1. Charity Watchdog Sites:

   • These non-profits evaluate charities based on financial efficiency and transparency.
     • Charity Navigator
     • CharityWatch
     • BBB Wise Giving Alliance (Give.org)

2. Official IRS Tool:

   • Use the IRS Tax-Exempt Organization Search (TEOS) to confirm if the organization is a registered 501(c)(3) nonprofit and if your donation is tax-deductible.

3. Independent Search:

   • Google the charity’s name along with words like "scam," "complaint," or "review" to see what others have reported.

4. Donate Directly:

   • Go directly to the charity’s official, verified website (type the address yourself) to make your donation securely.