The old Latin phrase “caveat emptor,” or “buyer beware,” has been on the minds of shoppers since the days of ancient Rome. But following a wave of severe natural disasters in the past year and an outbreak of charity scams that followed, a new one comes to mind. Philanthropists great and small should heed the warning “caveat dator,” or “donor beware.”
Some of the worst example of these cons can be found on the Internet, where bogus spam e-mails and Web sites solicit money from users who often don’t know any better, said Christopher Faulkner, CEO and founder of CI Host, a Web-hosting and data-center operation company. “It seems that after every natural disaster, there’s a group—and it seems to get larger every time—that watches CNN and says, ‘This is a money maker for me,’” he said. “We saw this with the tsunami, and we’ve seen it already with this earthquake that happened over in Asia. Because of the way the Internet works, you can put up a Web site in two hours and appear to be anybody to a novice user. Sometimes it’s even hard for an expert to tell if a Web site is legit or not. You can make money off of people who are trying to help those in need.”
Faulkner cited the example of a man based in Florida who set up a Web site for a phony charity organization that ostensibly was rescuing animals with a helicopter following Hurricane Katrina. Using the Pay Pal payment service, he was able to raise about $40,000 in only 24 hours. He was caught and charged, and the donors’ money was returned, but he was actually small-time compared to other scammers.
“This just goes to show you the amount of money that changes hands after a catastrophe like this,” Faulkner said. “And there are more people out there saying to themselves, ‘I can do this, but I won’t get caught.’ So it continues to get bigger and bigger. With the Katrina scams, there were over 4,000 Web sites that were put up in the first two weeks in September. The FBI scanned about 2,000 of those Web sites by hand and found that 60 percent of those were bogus in some form or fashion, registered to countries like China and Korea or a full-blown scam Web site.”
CI Host, which maintains Web sites, Web infrastructure and e-mail for 220,000 customers, has worked to keep its own clients shielded from these rip-offs. The company’s defense systems have given Faulkner an idea of just how many swindlers are out there. “We have 10 million e-mail accounts that span across our customers,” he said. “About 200 million of pieces of mail come into our network a day, so we have a very large sample of spam to give us an idea of what’s coming in, so we can keep databases that help prevent spam or phishing. After the tsunamis, we started to see a lot of spam e-mails coming in, and our customers started complaining about these e-mail from people trying to get money, but it wasn’t that big of a deal back then. After Katrina, though, at the height of all this, we saw between 10,000 and 15,000 e-mails an hour that were nothing but hurricane-related donation scams.”
He added that the majority of these are one-time cons run by independent hustlers in this country. However, large criminal networks operating overseas—beyond the reach of U.S. law—are expanding into this market as well. “I think organized crime is getting involved with this. I think the people in Eastern Europe, China and Korea who are writing viruses and running phishing scams are getting involved in this. They register multiple domains and multiple sites to make sure their net is that much bigger. We got a list of the domain names that were registered after Sept. 1 to have ‘Hurricane Katrina’ somewhere in them, and a lot of them were hosted at IP addresses outside the United States. That’s why these Web sites don’t disappear so quickly.”
Benefactors can avoid the scams by checking a database of legitimate charities at http://www.give.org, a Web site created and maintained by the Better Business Bureau. Faulkner also recommends never giving money to organizations that seek donations via unsolicited e-mails, as an overwhelming majority of genuine charities never send spam.