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Gov’t Warns of Charity Swindlers

November 12, 1998

WASHINGTON (AP) _ Gene Arnold’s heart went out to the caller who said he needed money to send underprivileged kids to summer camp.

Arnold, a retired Navy pilot in Greenville, S.C., wrote a check for $25 to the man he thought was from the state police association. The man promised that most of the money would benefit the charity.

But when the caller insisted on picking up the donation in person, Arnold checked around and discovered that the ``trooper″ was actually a for-profit fund-raiser _ hired by an organization _ who would pocket more than 70 percent of the donation.

``Since then, I don’t donate to telephone solicitations,″ Arnold said. This year, he said, ``I’ll give to the Salvation Army and people like that.″

With the holiday season around the corner, the government, anti-fraud groups and state attorneys general came out today to warn those imbued with the giving spirit to scrutinize even the most noble-sounding charities.

A survey released today by the American Association of Retired Persons suggests that while most Americans donate, many don’t know where their money will end up.

About 80 percent of Americans made at least one charitable donation in the last year in response to a phone or mail solicitation, the survey showed. At the same time, it said, more than two-thirds weren’t sure the telephone callers represented the organizations they claimed to. And about 57 percent said they never asked how their donations would be spent.

This makes charity fraud a potential gold mine for scam artists who pose as legitimate organizations or for telemarketers who solicit money on behalf of other groups, then claim the bulk of the donations ``fees.″ According to the survey, of those who made donations, 42 percent gave more than $100 and 10 percent gave more than $1000. In 1995, an estimated $1.43 billion in donations were misused or absconded with, law enforcement experts said.

``It doesn’t just hurt the consumer, it hurts the legitimate charity,″ said Cleo Manuel of the Washington-based National Consumer League. ``It gives consumers a negative view of charity solicitations over the phone.″

A common scam _badge fraud_ occurs all over the country, and is done by swindlers pretending to represent police or firefighter organizations. The AARP survey said 42 percent of Americans would donate to a caller representing a firefighters group, 39 percent to one from a police or sheriffs organization and 35 percent to a person from a veterans organization.

Sound-alike charities, with titles similar to legitimate groups, also deceive consumers by playing on name recognition.

``Between Thanksgiving and Christmas is when these people go into high gear,″ warns South Carolina’s secretary of state, Jim Miles, who estimates that his state alone loses $50 million a year in charity fraud. For the holidays, he compiles a ``Scrooge List″ of organizations with poor donation records.

Programs that purport to combat drug use among youths are common cover-ups as well, said Jonathan Rusch, general counsel at the Justice Department who co-chairs a task force on telemarketing.

Scam artists use lines like ``you can’t put a price on a child’s life″ to overcome the reluctance of would-be donors, Rusch said.

Find out exactly what cut telemarketers who make calls for groups are taking. Manuel said some middlemen claim as much as 80 percent.

Legitimate organizations must register with the state’s charity regulators, often the attorney general’s office, so consumers should check for proof of registration, said Miles.

If a group doesn’t sound legitimate, don’t wait for the pitch, he said. Hang up.

The AARP telephone survey of 1,683 adults over the age of 25 was conducted between Aug. 12 and Aug. 30 by International Communications Research of Media, Pa. The margin of error is plus or minus 2 percentage points.

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