What You Should Know Before Donating to a Disaster Charity or Paying a Contractor

Jupiterimages/Thinkstock(NEW YORK) -- The Department of Justice has warned of the potential for disaster fraud in the aftermath of superstorm Sandy, which ravaged millions of homes and businesses along the Atlantic Coast, and as of Friday morning, had left more than 3.6 million people in 11 states without power.

Suspected fraudulent activity relating to storm relief efforts should be reported to the National Center for Disaster Fraud's toll-free hot line at 866-720-5721, which is available 24-hours a day, seven-days a week .

Located in Baton Rouge, La., the fraud center was established by the Justice Department in the fall of 2005 following Hurricane Katrina. Its task force has prosecuted 1,439 individuals throughout the country related to Hurricanes Katrina, Rita and Wilma, according to the center. Those prosecutions included charity scams, government and private-sector benefit fraud, identity theft, contract and procurement fraud and public corruption.

The Federal Trade Commission has stepped in too with help on how home and business owners who need to hire contractors can avoid scammers.

First, said the FTC, ask for copies of a contractor's general liability and worker's compensation insurance. Homeowners are advised to check the contractor's identification and references.

"Deal with reputable people in your community," the FTC advises.

Next, if a down payment is required, pay only the minimum.

If you suspect a contractor is committing fraud, contact local law enforcement authorities and the Better Business Bureau.

The FTC offers the following tips for donating to charities:

1. Donate only to charities you know and trust.

Be alert for charities that seem to have sprung up overnight. Conduct due diligence on a charity. One way is to contact the Better Business Bureau's Wise Giving Alliance at www.give.org.
 
2. Ask if the caller is a paid fundraiser.

The FTC advises that consumers ask fundraisers who they work for, and what percentage of a donation goes to the charity and what percentage to the fundraiser. "If you don't get a clear answer, or if you don't like the answer you get, consider donating to a different organization," the FTC states.

3. Do not give out personal or financial information.

Your personal information includes your credit card or bank account number. The FTC says don't give that out unless you know the charity is reputable.

4. Never send cash.

If you give in cash, you won't know for sure if the organization will ever receive your donation, nor will you have a record for tax purposes.

Copyright 2012 ABC News Radio

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