Supporters and committed donors assist charitable entities in working towards their goals of supporting specific causes.
Whether the goal is to help with cancer research, provide housing and supplies to the homeless, or assist veterans and active duty military, fraudsters are always seeking ways to fine-tune their methods and exploit the generosity of others. Giving to charities is no exception.
As reported by the Better Business Bureau Wise Giving Alliance, scammers are using overpayment schemes as a method to deceive charitable organizations.
Here are some characteristics of this type of scam:
- A Donor reaches out expressing interest in making a large donation to the charity;
- The Donor then express mails the large donation using a fraudulent check;
- Afterward the Donor immediately informs the charity a mistake has been made and requests a full or partial refund of the donation while providing an emotional excuse for the request, such as a sick child in need of medical care;
- If the charity issues a refund before receiving notification from their bank the donation check is a fraud, the charity is on the hook and is responsible for the losses, including any associated bank fees and charges.
Tips to help avoid becoming victimized by check donation scams:
- Know your donor: While it may be challenging to verify all donors, requesting identification verification and personal contact information, such as current address, telephone number, and email will generally provide some resistance to those attempting to commit fraud as fraudsters prefer the path of least resistance.
- Scrutinize every check: Scammers often use widely available technology to create and print checks that appear to be legitimate. Look for signs of a fraudulent check, such as poorly printed/bleeding fonts, omitted check numbers, missing address information for the customer or the bank, absent or incorrect MICR (Magnetic Ink Character Recognition) encoding, mismatch MICR encoding relating the check number, or checks missing perforation lines.
- Verify Funds: Contact the issuing bank using information from the bank’s website, not the check, to verify funds. Even if funds can be verified, ask the bank what that specifically entails as most verifications are only good for that moment in-time and may not be applicable later. If the financial institution is unwilling to verify funds, do not use the funds until you have verification from your bank the check is valid.
- Do not use the funds immediately: While we live in the electronic age and have become accustom to immediate financial transactions, it is important to remember paper checks may take days or sometimes weeks to work through all the processes involved to physically clear a bank account. As a result, consult with your bank on their check clearing processes. Remember, just because the bank may provide access to the funds, it doesn’t mean the check is valid.
For more information relating to charitable scams, please visit the Charity Fraud Center. If you believe you have been victimized by a donation scam or wish to report suspicious activity, please file a report here.