Protect Your Organization Against Fraud

Online fundraising is a powerful tool for good! But, unfortunately, as online giving becomes more common, nonprofits are becoming targets for online scams using stolen credit cards and fake checks. GlobalGiving has developed robust systems to protect our partners from fraudulent donations but we believe there’s more we can do to raise awareness about potential risks within the nonprofit community. On Wednesday, August 20th, we hosted a webinar to shed light on the different types of fraudulent activity that we have encountered, to share the mechanisms that we have put in place to protect our partners, and to propose steps your organization can take to safeguard against these scams.

The webinar was hosted by Nick Hamlin, GlobalGiving’s Business Intelligence Analyst, who leads the charge in identifying irregular activity and reversing fraudulent donations. We were also joined by Rebecca Davis, the Founder of Rebecca Davis Dance Company (RDDC), who offered to share her organization’s experience with fraud to help other organizations identify risky activity. Check out a brief summary is provided below.

Why worry about fraud?

Non-profits rely on trust, time, and funding to accomplish their mission but fraud can compromise all three and reduce your impact!

Stolen credit cardsFour Common Types of Fraudulent Activity:

Stolen Credit Card Testing

  • What happens?
    • Fraudsters obtain lists of stolen credit card numbers
    • Before using them, they need to test if they work
    • Make a small donation on GG before larger purchases elsewhere
    • Small transactions (usually 10-50 USD)
    • Donors you’ve never heard of before
    • Strange email addresses
  • How is GG protecting my organization from this?
    • Our system rejects many stolen cards automatically
    • Automatic regular scans to identify donations that succeeded
    • Preemptive reversals and notifications to you
    • Known fraudsters are no longer allowed to use GG

Reversal

Fake Large Donor

  • What happens?
    • Someone posing as a donor contacts your organization
    • “We want to support you, but also another organization not on GG”
    • You’re asked to forward money to the other organization
    • The “donor” makes their donation with a stolen card, hoping you’ll forward the money before they’re found out
  • How is GG protecting my organization from this?
    • Automatic regular scans to identify donations
    • Large partner network allows us to raise alarm quickly
    • Preemptive reversals and notifications to you
    • Known fraudsters are no longer allowed to use GG
    • Terms of service requires funds to be used only for the project they’re sent to

Check Fraud

  • What happens?
    • Someone posing as a donor contacts your organization
    • “We want to support you, but also another organization”
    • You’re asked to forward money to the other organization
    • The “donor” makes their donation with a fraudulent check, hoping you’ll forward the money before they’re found out

Organization Fraud

  • What happens?
    • An organization, knowingly or unknowingly, uses fraudulent means to donate to their projects on GG
    • May work with other organizations to donate to each other
    • Sometimes involved “Fundraiser organizations”
  • How is GG protecting against this?
    • Application process allows us to detect borderline organizations early
    • Automatic regular scans to identify suspicious activity
    • Program team outreach upon suspicion of fraud
    • Fraudulent organizations are banned from GG and can be reported to local authorities

Case Study: RDDC

  • September 2013: received an email from House Church International Fellowship (http://www.housechurchinternationalfellowship.net/)
  • Referred funder to our project on GlobalGiving, supposed donor was unresponsive
  • Spring 2014: received an email from funder indicating funds had been secured for RDDC; inquired how to send the funds
  • Funder asked if we could wire money to another organization in Kenya because the funder was not able to send international wires.  RDDC consulted with our board and drew up a MOU.  We insisted all funds be deposited in our account and cleared before wiring funds onward.
  • Funder sent additional funds and these checks were deposited into RDDC’s account.  Funds cleared our account, but a stop payment was issued five days after the clearance.  Some of the wires to Kenya had already been processed by that time.

Beware of Assumptions

What should you do if you suspect fraud?

  • If it relates to your fundraising on Globalgiving, let us know right away!
  • If it doesn’t relate to Globalgiving, but you’re unsure, please ask!
  • Keep a close eye on your records (Donation Manager, bank accounts, etc.)
  • Remember the Globalgiving Terms of Service

Please feel free to email us at projecthelp@globalgiving.org with questions or concerns. We’re here to hep!

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