Spending Wisely It's one of the most profitable times of the year for scammers...
One of my research assistants recently told me her nearly 90-year-old grandmother (who is still as sharp as a tack) is hounded by scam charities asking her to donate to bogus causes every holiday season. Luckily, she has the wherewithal to research these companies and recognize them as bogus without losing any money in the process. But many folks aren't as diligent as she is. Unfortunately, this is the time of year to watch out for scammers.
In an Experian survey of 1,000 consumers, 24% reported being the victim of fraud or identity theft during the holidays. The many age-related changes of the brain make seniors particularly vulnerable to scammers.
The human body typically has a response system that alerts us if something doesn't feel right, a gut feeling. As we age, that natural alarm ability diminishes in some of us. This is because our brain tissue – specifically, a part of the brain called the insula – thins out and becomes less dense over time...
But these changes can be difficult to pinpoint because we all age a little differently, so some people are more vulnerable than others.
This year, with the COVID-19 pandemic, more people than usual will make their charitable donations online. So buyers beware, and make sure to do your research before any money exchanges hands.
Last year, charitable giving in the U.S. reached $450 billion dollars, with the vast majority of that coming from individuals – as opposed to corporations, foundations, or bequests. A charitable donation in someone else's name can be a wonderful gift.
If you've recently encountered a charity that's new and interesting to you, but don't really know anything about them, please gather more information before sending them any of your money.
And if you're someone who regularly donates, double check the organization you are giving to. That way, you can be sure your money is being used as intended.
We certainly don't want to tell you where to put your money if you want to donate it, but I can give you some tips on how to identify a good charity...
There are a few nonprofit organizations who assess charities: the BBB Wise Giving Alliance, Charity Navigator, and Charity Watch. Start your process by looking on these websites.
If your chosen charity shows up on the lists of more than one of these three organizations, that should give you some piece of mind. Each of these three organizations explains on their website how they rate the charities and provide insight into the charity's operations.
But don't let that be your only guiding factor. There are some folks who argue the rating systems aren't ideal for determining how much good a charity is actually doing.
Be sure to examine the charity's website for detailed information on how they use donations to directly support their cause. Look for clarity and be suspicious if you can't find it. You should see how much of your money goes to where it's needed, and exactly when it will arrive. You will also want to know who is seeing your personal information and to keep control of that information.
Keep records of all correspondence you have with a charity, just to be on the safe side. (If you do happen to get scammed, this information will be useful when reporting the incident to the Federal Trade Commission.)
When you feel comfortable – not pressured – sending your money, do so by check or credit card. Never, ever use a wire transfer, cash, online-banking transfer method (like Zelle), or a gift card. These are methods in which any monies transferred are impossible to recover if it turns out that there's any fraud... and the scammers are counting on your naivete. Always keep a record of your payment and make sure the amount that leaves your account is correct.
Also, be sure to get a tax receipt from the charitable organization for your yearly deductions. This will serve you well at tax time and will also serve as an extra measure of record keeping in case something goes wrong. By the way, you can deduct up to $300 of charitable donations for the year 2020 before having to itemize.
If charity isn't your cup of tea, another great way to "give" this year is by shopping local. This is an important time – due to the COVID-19 pandemic – to support small, locally owned businesses. This year, 60% of holiday shoppers plan on doing some of their buying locally. And you can still keep yourself safe by shopping from the comfort of your own home. Shop using a known local business' website or go old-school and call them directly over the phone.
Helping local businesses to stay afloat is essential to our community. It keeps our marketplace competitive, our products diverse, and provides our community members with good paying jobs. Not all small businesses have a website, and many are using them for the first time this year. So, be patient and don't hesitate to pick up the phone and buy something especially if you're having trouble shopping locally online.
What We're Reading...
- Age of fraud: Are seniors more vulnerable to financial scams?
- Something different: December holidays around the world.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
December 15, 2020