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Don’t let holiday giving give you the holiday blues!


By Jenefer Duane, Sr. Program Analyst, Consumer Financial Protection Bureau (CFPB), Office for Older Americans

As the holidays approach, you may be thinking about making gifts to help people in need or to support other causes you believe in. If you’re considering a request for a donation to a charity over the holidays, consider doing some research before you give. By finding out as much as you can about the charity, you can avoid fraudsters who try to take advantage of your generosity. Here are tips to help make sure your charitable contributions don’t go to a scammer.

Signs of a Charity Scam

According to the Federal Trade Commission (FTC), charities and fundraisers (groups that solicit funds on behalf of organizations) use the phone, face-to-face contact, email, the internet (including social networking sites), and mobile devices to solicit and obtain donations. Naturally, scammers use these same methods to take advantage of your goodwill. Regardless of how they reach you, the FTC recommends to be cautious of any charity or fundraiser that:

• Refuses to provide detailed information about its identity, mission, costs, and how the donation will be used, including what percent of your donation  will go to the charity rather than to the caller or the caller’s company.
• Doesn’t provide proof that a contribution is tax deductible.
• Uses a sound-alike name that closely resembles that of a better-known, reputable organization.
• Thanks you for a pledge you don’t remember making.
• Uses high-pressure tactics  such as  trying to get you to donate immediately, without giving you time to think about it and do your research.
• Asks for donations in cash or asks you to wire money.
• Offers to send a courier or overnight delivery service to collect the donation immediately.
• Guarantees sweepstakes winnings in exchange for a contribution. By law, you never have to give a donation to be eligible to win a sweepstakes.

Charity Checklist

The FTC also suggests that you use these precautions to help you ensure that your donation benefits the people and organizations that you want to help.

• Ask for detailed information about the charity, including name, address, and telephone number.
• Get the exact name of the organization and do some research. Searching the name of the organization online — especially with the word “complaint(s)” or “scam”— is one way to learn about its reputation.
• Call the charity directly. Find out if the organization is aware of the solicitation and has authorized the use of its name. The organization’s development staff should be able to help you.
• Find out if the charity or fundraiser must be registered in your state by contacting the National Association of State Charity Officials.
• Check on the charity by contacting the Better Business Bureau’s (BBB) Wise Giving AllianceCharity NavigatorCharity Watch, or GuideStar.
• Ask if the caller is a paid fundraiser. If so, ask:
◦How much will go to the actual cause to which you’re donating
◦How much will go to the fundraiser
• Keep a record of your donations and make an annual donation plan. That way, you can decide which causes to support and which reputable charities should receive your donations.
• Visit this Internal Revenue Service (IRS) webpage: irs.gov/Charities-&-Non-Profits/Search-for-Charities to find out which organizations are eligible to receive tax deductible contributions.
• Know the difference between “tax exempt” and “tax deductible.” Tax exempt means the organization doesn’t have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return.
• Never send cash donations. For security and tax purposes, it’s best to pay    by check —made payable to the charity — or by credit card.
• Never wire money to someone claiming to be a charity. Scammers often request donations to be wired because wiring money is like sending cash: once you send it, you can’t get it back.
• Do not donate until you’ve thoroughly researched the charity.
• If a donation request comes from a group claiming to help your local community (for example, local police or firefighters), ask the local agency if they have heard of the group and are getting financial support.

Report Charity Scams

If you think you’ve been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission and your state Attorney General’s office. Your complaints can help detect patterns of wrong-doing and lead to investigations and prosecutions.

For more information, visit ftc.gov/charityfraud.

Share this information with your friends, parents and others in your community. For more information on identifying and preventing frauds and scams, check out Money Smart for Older Adults: Prevent Elder Financial Exploitation guide for consumers. In addition, the Consumer Financial Protection Bureau’s Office for Older Americans has produced materials that include Managing Someone Else’s Money Guides for financial caregiversTo find these materials and to learn more, go to consumerfinance.gov/older-americans. But most important, have a safe and happy holiday season!

The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. The CFPB’s Office for Older Americans is the only office in the federal government specifically dedicated to the financial health of older consumers.  Its mission is to help consumers 62 years or older (1) prevent unfair, deceptive and abusive practices, (2) build long-term savings as they plan for retirement and beyond, and (3) help older consumers make sound financial decisions as they navigate the marketplace. The CFPB accepts consumer complaints on credit cards, credit reports, debt collection, money transfers, mortgages, bank accounts and services, car loans, other consumer loans, and private student loans. These complaints may be submitted by phone, mail, fax, and through its website.  To submit a complaint or to learn more go to www.consumerfinance.gov.

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We are sincerely appreciative to Judith D. Tamkin for her gift to help establish the USC Center on Elder Mistreatment’s website. Her deep and personal commitment to eradicating elder abuse is helping to reshape our understanding of elder abuse and ultimately save innumerable older adults from abuse and neglect.