Personal Finance

After a disaster, frauds pose as charities to take your card info

The scenes of devastation wrought by the earthquake and tsunami in Japan have Americans rushing to their computers, wanting to contribute to disaster relief efforts.

But before you input your credit card information on some charity's website and hit "send," vet the charitable organization to make sure it's legitimate -- or your money might end up feeding a scammer's greed instead of a person in need.

Just days after the disaster began to unfold, philanthropic and computer security experts were already hearing reports of fake e-mails and Facebook pages popping up, appealing for donations.

At a time like this, Americans are "very susceptible" to pleas for assistance, says Doug White, academic director of the George H. Heyman Center for Philanthropy and Fundraising at the New York University School of Continuing and Professional Studies. "People are saying, 'What can we do to help the people of Japan?' It's a natural outpouring of our humanity."

But just like any other online transaction, you need to do your due diligence about the organization where you plan to send money and the security of its website. That can protect you from credit card and identity theft -- and make sure you're not padding the pockets of a fraudster.

Check out the charity The most important thing you can do before making a donation is to research the charity.

"A lot of fake organizations emerge after something like this," White says.

And even if one is legit, "a charity in a situation like this needs to have an on-ground presence." Donating to a startup that isn't already involved in Japan "may hinder their ability to really follow through on promises," says Bennett Weiner, chief operating officer of the Better Business Bureau Wise Giving Alliance. The organization monitors and reports on charities that solicit nationally or provide national or international services.

You can learn more about a charity you have your eye on through the Better Business website or sites such as Charity Navigator or Guide Star.

Charity Navigator has vetted 5,500 of the 1 million charities in existence, says spokeswoman Sandra Miniutti. The groups evaluated accounts for about 65 percent of all donations made and are registered with the Internal Revenue Service as 501(c)3 nonprofit organizations

The one major exception to Charity Navigator's rating system are groups such as the Salvation Army, which are registered as churches and do not have to file an IRS Form 990, or Return of Organization Exempt From Income Tax.

You can check to see if an organization is designated as a 501(c)3 at the IRS website.

In a situation such as the disaster in Japan, White recommends choosing a charity that has a long history of taking in large sums of money quickly, such as the Red Cross, World Vision or UNICEF, which should help ensure the funds are processed properly.

Weiner says it's important to remember "different organizations have different expertise, depending n what phase of the disaster they are involved in." Some focus on search and rescue, others on emergency relief and others on reconstruction

If you want to deduct the donation from your taxes, your contribution must go to a U.S.-based charity, he adds.

Keep your guard up While you probably know better than to fall prey to a Nigerian e-mail scam or a phony bank e-mail asking you to "verify" your account information, it's easier to fall victim to an emotional appeal during a natural disaster.

"Watch out for phishing expeditions," Weiner says. You might receive a spam e-mail claiming to link to the website of a well-known charity, and the e-mail could very well link to a phony site that's set up to collect your personal information and use it for credit card theft or identity theft.

Instead, if you want to give money to a particular organization, Weiner recommends going directly to that charity's website to make a donation through its secure server.

Miniutti also warns against clicking through on links posted on Facebook, even if they look legitimate.

Also be wary of people claiming to be victims of the disaster, she says. In the earthquake and tsunami devastated regions, "victims in Japan don't have Internet, let alone your e-mail address."

Not-so high tech Not all scammers rely on high-tech techniques

Some will use the phone to call, claiming they represent a particular charity, and ask for your credit card number so you can make a "donation." (Being registered on the Do Not Call List does not prohibit legitimate charities from contacting you.)

Rather than providing your credit card information, Weiner recommends writing down the charity's information, and then checking it out online.

"People's guards go down when it's a charity and their emotions are involved," he says.

Even fundraising efforts at local businesses should be scrutinized. You should ask what charity the money is going to, what percentage of proceeds is being donated and if there is a maximum or minimum amount that will be donated, Weiner says.

While these may not be scams, the efforts may be happening without the knowledge or blessing of the charity being touted.

Cash, check, charge? The experts agree that a credit card donation is the best route to take because it gets to the recipient fastest. And the major credit card companies have announced they are waiving transaction fees for contributions to certain charities because of the disaster.

Many organizations also accept donations via text, but there may be texting fees, and delays of days or weeks before the money arrives, White says.

Donations should never be made in cash. While checks are secure, they may be more labor intensive to process.

In a statement, Wells Fargo recommends making donations by credit card, debit card or check because they can be tracked. If you see an unauthorized transaction, you should notify your financial institution immediately.

If you think you've fallen victim to fraud, you can contact the National Center for Disaster Fraud, set up by the U.S. Department of Justice following Hurricane Katrina. If you think you're a victim of a cybercrime, contact the Internet Crime Complaint Center established by the FBI, or the National White Collar Crime Center.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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