Scam Alert: Bogus Charities May Use Names that Mimic Those of Well-Known Organizations

"Hundreds of thousands of well-meaning people—many senior citizens on fixed incomes—contributed with the expectation that great things would be done with their money," says Eau Claire (Wis.) County District Attorney Rich White. "In reality, as little as 35 cents of every $100 they donated was actually used for charitable purposes."

Most of the money, White says, went into the coffers of a scam ring operating in his county. Telemarketers seek donations using precisely worded scripts, right down to "the sparkle in the vets' eyes when they receive their own toothbrushes."

In February eight Eau Claire County men were charged with racketeering, and five fundraising firms were accused of involvement in the scheme by soliciting for seven groups with names like the Coalition of Police and Sheriffs, Veterans Assistance Council and Disabled Firefighters Fund.

"It literally involved picking out a name that has strong emotional appeal and starting to call people for donations," White says.

It's also a familiar formula for duping people. "Because they generate such public sympathy—especially among older donors—police and fire organizations, charities that claim to assist children in some way, relief organizations in the wake of a disaster and, more recently, veterans' causes are ripe for ... unscrupulous solicitors," says Bennett Weiner of the Better Business Bureau Wise Giving Alliance, whose www.give.org website verifies charity legitimacy.

Most of the 1 million U.S. charities are legitimate, Weiner says, but at least a third evaluated by his website do not meet Better Business Bureau standards.

A fake charity claiming to help disadvantaged children got nearly $1,200 from donor Marie Woods, 74, of Coconut Creek, Fla. After she gave her bank account number to a telemarketer, at least three withdrawals—the smallest for $316—were made over three weeks last June.

"They called saying they're trying to help poor, sick children, and I wanted to be nice," says Woods, a retired nurse's aide. "Now I think twice before answering the phone."

Of the $5 million collected by the Florida-based scammers, officials say only $110,000 went to the needy.

To protect against phony charities:

* Get printed materials from the charity before donating. Materials are no guarantee of legitimacy, but organizations that don't or won't send them are more likely to be bogus.

* Never provide a credit card or bank account number unless you initiate the phone call.

* Never respond to e-mail solicitations.

* Be aware that bogus charities may use names that mimic those of well-known organizations.

* Go to www.charitynavigator.org to identify legitimate charities; or visit www.guidestar.org for information on nonprofit organizations. (The nonprofit Charity Navigator says better charities typically spend less than 25 percent of all donations on fundraising and administrative costs.)

* Contact your state attorney general or secretary of state to learn which charities are allowed to operate in your state or to report suspicious activity.

Sid Kirchheimer's Scam-Proof Your Lifehas just been published by AARP/Sterling Publishing.