Updated: September 10, 2005
Disasters bring out the best in people and the worst. These two dynamics intersect when scam-artists create fake charities with fundraising appeals, thereby bilking people out of donations that they meant to give to the victims.
Charity fraud. In the aftermath of Hurricanes Katrina and Rita, there will no doubt be the usual fraudsters attempting to cash in on people's heartfelt generosity. Here's how you can avoid becoming a victim of such charlatans.
- Investigate charities before giving. But beware. Crooks may use names that are similar to legitimate charities. Two useful websites for evaluating charities are www.charitynavigator.org and www.give.org (a service of the Better Business Bureau).
- Beware of charities that contact you by phone, especially if they offer to come to your residence to pick up your donation. Don't be taken in by an appeal of urgency. Legitimate charities will not send a runner to your door. This is a sure sign of fraud. Also, do not wire the donation to the charity. This too is a common fraud scheme.
- Do not respond to emails that solicit funds. And do not click on attachments purporting to show photos of hurricane damage. They might contain viruses. Only open attachments from known senders. To learn more, go to the FBI's Internet Complaint Center site: www.ic3.gov/media/2005/050902.htm .
- Be wary of so-called charity web site domain names containing "Katrina" or "Rita" in the address. The FBI warns that many of these are scams. They not only might steal your donation, but they could use the account information that you give them to commit identity theft.
- Contact charities on your own rather than responding to those that contact you. If you want to donate online, type the name of the charity into the address bar yourself rather than clicking on a link from another web site or an email message whose legitimacy you cannot verify. Further, do not use a search-engine to find the charity's website . You might be sent to a fake look-alike.
- For additional tips on giving to charities, visit this site: www.give.org/news/disaster_tips.asp.
- Scambusters web site offers additional information on hurricane related scams, www.scambusters.org/hurricanekatrinascams.html.
Investment fraud. Use similar precautions if you are solicited for disaster-related investment opportunities. The aftermath of the Katrina and Rita hurricanes is expected to bring out fraudulent investment schemes in oil production, products like water purification systems, and investment pools aimed at helping small business owners re-launch their companies.
If the so-called security firm uses pressure tactics to get you to invest right away with warnings of this being a "one-time opportunity," this is a sign of possible fraud. Always ask for the prospectus. And check with your state's securities regulator before signing on the dotted line. The web site of the North American Securities Administrators Association provides a list of state regulators: www.nasaa.org.
Individuals who have been evacuated because of the hurricane could be at increased risk for identity theft. They are likely to have left personal documents behind, like birth certificates, driver's licenses, Social Security cards, and financial account papers containing account numbers and SSNs. Such documents could get into the hands of identity thieves.
We recommend that victims check their credit reports a month or two from the time they were evacuated, looking for signs of fraud. And continue to check credit reports every few months for at least the next year. Federal law enables individuals to get one free credit report a year from each of the three credit bureaus. For more information, visit www.annualcreditreport.com and the Federal Trade Commission site, www.ftc.gov/bcp/conline/edcams/credit/ycr_free_reports.htm.
We advise that individuals either order their credit reports by calling the toll-free number, (877) 322-8228, or printing out the online form and applying via the mail. https://www.annualcreditreport.com/cra/requestformfinal.pdf
Once mail service is restored, hurricane victims should also check the monthly account statements of all bank and credit accounts, looking for signs of fraud.
The Federal Trade Commission offers tips for hurricane victims and affected businesses on managing money and avoiding scams. Visit their website at www.ftc.gov/bcp/conline/events/katrina/index.html.