How to help clients avoid post-disaster donation fraud

When natural disasters hit, many people are moved to help the victims by donating money, but experts warn to be wary of scammers.

“It’s a tremendous problem. Nobody is immune to it,” said Patrick Craven, director of the Center for Cyber Safety and Education, based in Clearwater, Fla. “It’s very frustrating and very disheartening that people would take advantage of others during these tough times.”

CPAs can help their clients avoid falling victim to fraud, Craven said, by helping ensure that any significant donations are made to legitimate 501(c)(3) organizations so they can be tax-deductible.

Scammers target not only people directly affected by a disaster or crisis—such as purported contractors hired to clear debris but who take payment and disappear before doing the service—but also those who are opening their wallets to help. The National Center for Disaster Fraud, an agency within the U.S. Department of Justice, has received hundreds of complaints after hurricanes Harvey, Irma, and Maria in September.

The internet allows fraudsters to reach people through social media, email, and websites claiming to represent relief organizations, Craven said. Beware of online crowdfunding sites. Scammers target people through fictitious campaigns, and practitioners should remind clients that even legitimate crowdfunding campaigns are not 501(c)(3) charities.

The Center for Cyber Safety and Education recommends these tips before making a financial donation:

• Do not click on links in social media or emails from organizations that appear to be charities; the links could be tied to fraudsters or malware.

• Be skeptical of online crowdfunding campaigns for a specific victim. “You don’t know if that’s a real story,” Craven said. “Don’t get caught up in the emotion of it.”

• Be careful about fundraising events linked to a celebrity. Research those events, such as concerts or golf tournaments, to ensure that all proceeds will go to victims and not to the event promoter.

• Be wary of people soliciting money door-to-door or outside of stores; they may not be with a legitimate charity.

It’s best to donate to legitimate charities by going directly to their websites or organizations, Craven said. And there’s no rush to give immediately during or after a disaster: Victims will need help for months afterward.

“Slow down and think about it,” Craven said. “Make sure you do it right, or you’re helping the criminals and not the people devastated by the disasters.”

Anslee Wolfe is a freelance writer in Colorado Springs, Colo. To comment on this article, contact Chris Baysden, senior manager of newsletters at the Association of International Certified Professional Accountants.