Fake Charity Made Millions — Here’s How to Avoid a Scam

Photo (cc) by lovette<3

A for-profit company accused of masquerading as a nonprofit charity has agreed to a $700,000 settlement with the state of New York.

Thrift Land USA of Yonkers tricked and misled the public into believing that clothing the company collected at more than 1,100 donation bins would benefit two charities whose name and logo appeared on the bins, according to the office of New York Attorney General Eric T. Schneiderman.

Instead, Thrift Land USA gave those two charities (I Love Our Youth Inc. and Big Brothers Big Sisters of Rockland County) “only a small, monthly fee” for the use of their names and logos and then sold the donated clothing “at a huge profit,” according to the Attorney General’s Office.

A news release from the Attorney General’s Office did not specify how much the company profited, but CNN reports the amount as being at least $10 million.

The investigation into Thrift Land USA also found that the company led people who arranged for home pickup to believe that their donations were tax-deductible and that the company engaged in false advertising through mailings and its website.

Schneiderman states in the news release his office issued Thursday:

“Duping members of the public into thinking that they are making a charitable donation, when in fact they are enriching a for-profit corporation, is both deceptive and illegal.”

To avoid falling for a phony charity — and to potentially lower your tax bill — check an organization’s status with the Internal Revenue Service before donating.

Charitable donations can be deducted from federal income taxes, but only if they’re made to an organization that the IRS has deemed tax-exempt. You can use the federal agency’s Exempt Organizations Select Check database to determine if a charity is eligible.

To learn more about how to vet a charity, check out:

How do you check out charities before cutting them a check or leaving clothing in their donation bins? Share your thoughts in our Forums. It’s a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.

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