Local fraud expert outlines ways to mitigate crowdfunding ‘relief scams’

Local fraud expert outlines ways to mitigate crowdfunding ‘relief scams’

Bahamians urged to be mindful of ‘scammers’ hoping to cash in on Dorian devastation.

NASSAU, BAHAMAS — While there has been an outpouring of support for The Bahamas in the wake of Hurricane Dorian’s devastation on Abaco and Grand Bahama, a local fraud expert is urging Bahamians and others to be mindful of “fraudsters” and “scammers” seeking to take advantage of their generosity and support.

Kendrick Christie, a certified fraud examiner and managing partner of K Christie & Co Chartered Accountants / Fraud Examiners notes that scammers often use sketchy crowdfunding pages in the hopes of cashing in on the outpouring of the charitable giving in the wake of a disaster.

While some online fundraisers are obvious scams, there are others that may be more difficult to verify

“GoFundMe is used as it is the long-standing standard for donations and it has built in mechanisms to attempt to minimize fraud. There are however other methods for fundraising including accounts at financial institutions and lesser known crowd sharing sources,” Christie told Eyewitness News.

Christie says there are ways however to minimize fraud on GoFundMe and other methods of fundraising:


  1. Insist on appointing treasurers/coordinators of the charitable effort who are known for meticulous accounting, and have a record for integrity.


  1. Require those treasurers/coordinators to report in written fashion weekly/monthly on all donations collected and expenditures made.


  1. Create a quick list of rules around a) Donation collection and b) Expenditure approvals and payments.


  1. Look out for fraudsters who create duplicate GoFundMe accounts in an attempt to take advantage, report this to GoFundMe or any financial institution as bank accounts are also being used to collect donated funds.


  1. Create a “deposit Only” order with the financial institution at least while the funds are being raised


  1. GoFundMe has the “funds raised to date” figure on the donation page. Require the Treasurer and the organizing committee to show the match of funds spent back to this GoFundMe amount.


  1. Do not rely on trust– many frauds occur because individuals are afraid to offend.  Rely on ‘Trust but Verify”. This means you ask for paper verification of funds spend and on hand funds, not verbal.


  1. Remember that people who often have been hurt badly and in the case of the recent hurricane have lost everything, are relying on these donations and use that to motivate you to ask the tough questions of Leaders and Treasurers/Coordinators. Ask questions, get the answers, laugh later.


  1. Ensure that persons whose accounts are used to receive funds are in good standing with the IRS and their financial institution in the case of GoFundMe accounts, and are not only reputable but are prepared to confirm the periodic receipt of funds in their account to your organization on a regular basis.


  1. Be aware of expenditure schemes which break down into a) false vendors and b) overinflated spending.  For example, in the middle of the disaster, there is excitement and chaos, so the committee member contacts a friend who agrees to arrange the service for much higher than the normal price, they split the difference.


  1. The aim of Disaster committees should be to require all expense invoices to come before them for approval so that the committee can review and actually reduce through asking the vendor to provide a charitable discount or arrange for another quote on the service.