While many people pull together during times of crisis, there is also an increased risk for scams and fraud. To avoid scams, you need to ask questions – lots of them. Questions will help you determine if something is too good to be true. If the person trying to sell you a product or service can’t or won’t answer your questions or if the paperwork does not match the promises made to you, these are red flags and you might want to look for someone else.
Recognizing the tricks that scammers use, and the effects they have on us, can help you spot scams easier. Asking questions puts you back in control and puts any crooks on the spot.
Don’t necessarily trust titles that can be faked
Con artists may pose as government employees, insurance adjusters, law enforcement officials, bank employees or whoever it takes to get to your money. Titles are easy to fake. Always ask for identification and call the organization to confirm if the person works there. Never give personal information to anyone you don’t know. Also, remember that government employees will never ask you for financial information such as your bank account number.
One common scam is fake charities. These scams use names that are similar to organizations you may be familiar with to get you to make a “donation,” but your money ends up in the scammer’s pocket. Never make donations when you are contacted over the phone. Make sure you get the organization’s name and contact information and review written materials closely.
Don’t fall for “limited time only” offers
Scarcity is common in disasters, but don’t let it get the better of you. Be suspicious of contractors or others offering to move you to the front of the line. Also, beware of people offering “opportunities” that try to force you to make a snap decision. You should never make a decision under pressure. Take your time. Never sign anything without fully reading and understanding it first. If you are still unsure, ask a trusted relative, friend, or attorney for a second opinion before acting.
Be careful of mortgage scams
Most lenders will work with homeowners after a natural disaster and offer forbearance or some other form of loss mitigation assistance. Scammers often approach homeowners offering assistance to negotiate postponement of payments after a natural disaster. Consumers should contact their mortgage servicer for payment assistance and never pay anyone to negotiate with their servicer on their behalf.
Consult rating agencies and the IRS
Several websites and tools exist to help you recognize and prevent falling victim to charitable scams. Rating agencies such as BBB Wise Giving Alliance, Charity Navigator and CharityWatch evaluate groups based on a number of factors, including effectiveness, financial health, transparency, accountability, and complaints. The Better Business Bureau can also be a source of information about nonprofit organizations. GuideStar is another credible source of information about nonprofits. The IRS also provides an online tool called the Tax Exempt Organization Search to streamline the research process. It may not include some religious organizations, though.
Avoid unknown organizations
Consider donating to well-known and time-tested organizations such as the American Red Cross, United Way and The Salvation Army. Established disaster relief agencies are more trustworthy and likely more efficient than new or unknown charities. New organizations aren’t always operated by scammers. However, they might be inexperienced at dealing with major disaster relief efforts, and you want to ensure your money gets to the right place in a timely manner.
Steer clear of unknown individuals
It’s natural to want to help people adversely affected by natural disasters. If you know the individual, you might have better insight into how they use the funds. However, donations you make directly to an individual are not tax deductible. Conversely, if you give to someone you don’t know, you run the risk of falling victim to charitable scams. That person might toy with your emotions by telling a good story that makes them appear adversely affected by the disaster. In reality, the whole story is a lie. In those cases, your money is gone forever, and you probably have no recourse. In addition, beware of people who claim they are associated with charities, particularly if they solicit your donations via email or social networking sites. Pressure tactics can suggest they are fraudsters trying to take your cash.
Report charitable scams to the Federal and Local Government
Because charitable scams related to natural disasters occur regularly, the U.S. Department of Justice created the National Center for Disaster Fraud to investigate, prosecute and deter fraud. If you believe you were scammed – or suspect an organization is falsely collecting donations – you can call (866) 720-5721 to report it. The department is open 24 hours a day, seven days a week. You can also email email@example.com or fax your information to (225) 334-4707. Finally, you can report scams to the Sarpy County Sheriff’s Office at 402-593-2288.
More information and tips
Many generous people, like you, want to help others after natural disasters. You must make sure your money helps those who truly need it. For more information, see the Department of Justice’s Tips on Avoiding Fraudulent Charitable Contribution Schemes.