In distressing times like the current novel coronavirus pandemic, you can count on people’s giving spirits to help their community face the worst of a crisis through donations.
Whether it’s gathering up unused protective equipment such as N95 masks for health care workers or making donations to food banks to feed vulnerable residents and the newly unemployed, many have answered that call already.
But, unfortunately, trying times also bring out fraudulent actors looking to take advantage of these kind-hearted donors by setting up fake charities to sweep in ill-gotten donations.
Law enforcement agencies have already sent out alerts about fraudulent schemes, warning the public of false promises of cures or vaccines as well as people posing as UNICEF, the Red Cross, or other well-known charities.
The National Center for Disaster Fraud, a federal effort established in 2005 after Hurricane Katrina and housed in the U.S. Department of Justice, is taking in complaints related to the COVID-19 crisis. Members of the public can report issues at 866-720-5721 or via a web form.
Forensic accountants know all too well how fake charities quickly pop up during crises, said Rumbi Bwerinofa-Petrozzello, CPA/CFF, the principal behind New York City-based Rock Forensics LLC. The AICPA’s Forensic and Valuation Services recently issued an Eye on Fraud report about fraud in the wake of natural disasters such as the ongoing COVID-19 pandemic.
“Be careful where you are sending your money,” Bwerinofa-Petrozzello said. “This is a time when people will try to perpetrate fraud.”
Accountants can help their clients spot, and avoid, fraudulent charities in the wake of disasters like the ongoing global pandemic. Here, several experts share their thoughts on how.
Do some background work. It’s important to make sure any pleas for donations that come in through email or by phone will flow through to not-for-profit organizations actually doing legitimate work, Bwerinofa-Petrozzello said.
Before making any donations, she suggests double-checking charities at websites like GuideStar, the Better Business Bureau’s Wise Giving Alliance, and Charity Navigator to ensure the charity operates in line with federal guidelines. Both the Better Business Bureau and Charity Navigator have already assembled lists of vetted charities pitching in to help in the ongoing public health crisis.
Also take a close look at the name of the charity. One tactic used frequently in fraudulent schemes is to mimic the name of established not-for-profit organizations, such as Doctors Without Borders, with a close approximation like Borderless Doctors in hopes of piggybacking on the legitimate organization’s reputation.
Resist pressure to donate now. This is a red flag for a fraudulent scheme, with an individual on the phone or in an email insinuating they need the donation right now to help, said David Zweighaft, CPA/CFF, of RSZ Forensic Accounting & Consulting Services. The perpetrator hopes to capitalize on the emotions of the moment, when people tend to suspend their better thinking and their rush to help.
Legitimate organizations won't apply that same level of pressure, and people should be wary of anyone saying the donation needs to come in immediately to be effective.
He suggests getting used to waiting a bit to donate after being approached. That gives people time to ensure the charity is legitimate, and the donation will be just as welcome a few days from the initial ask.
When in doubt, hover. If an email comes across from a group asking for donations, make sure the email address is legitimate, Zweighaft said.
To do that, hovering the mouse over the email address, which should “unmask” the email address and indicate whether it is linked to a real charity or one crafted to dupe people, he said.
“If you see a string of firstname.lastname@example.org, and it doesn’t look like MarcusSmith@MtSinaiHospital.org, then that’s a scam,” Zweighaft said, referencing the venerable New York medical institution.
Likewise, don’t give credit card or banking information over the phone.
Zweighaft also suggests avoiding clicking on links sent in emails and instead looking up the charity independently through search engines. Then, you can make a donation through portals available on the group’s website. That will avoid any donations being misdirected in the chance that the email plea was false. Avoiding illegitimate charity links will also help prevent phishing scams and inadvertent downloads of malware onto your computer, which makes you vulnerable to future hacking attempts.
Question GoFundMe pleas. There has been a proliferation in recent years of crowdsourcing websites like GoFundMe.com, where people can quickly put up fundraising pleas to cover unexpected medical bills or personal tragedies.
The platform doesn’t verify individuals’ pleas, and there’s no way to know if a person’s tale of woe is valid or concocted to swindle people out of money, Bwerinofa-Petrozzello said.
Bwerinofa-Petrozzello suggests avoiding donations on the platform altogether, unless you personally know the person asking for help and know the story behind the request for funds is true.
Even in trying times like now, it’s important for people to be vigilant. How they interact with charities and CPAs can help by talking about this type of fraud and asking clients to be on high alert.
“Just double-check who you are giving your money, even triple-check,” Bwerinofa-Petrozzello said.
— Sarah Ovaska is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Drew Adamek, a JofA senior editor, at Andrew.Adamek@aicpa-cima.com.