Online charity raffles are a great and effective way to donate to causes that are close to your heart. Americans’ generous contributions amounting to approximately $471 billion in 2020, supports wonderful organizations in the fields of healthcare, education, environmental protection, etc.
But if you want your donation to make a difference in someone’s life, it is very important to do your research and choose your charity wisely. Unfortunately, donors’ readiness to give to charitable causes also opens doors for scammers who want to profit. Lottery scams have been going strong for a long time and show no sign of abating.
In 2020, clueless participants were hoodwinked out of $166 million via fraudulent prizes, sweepstakes, and lotteries, with the Federal Trade Commission (FTC) receiving over 116,000 reports of fraud the same year. It usually starts with an email, a phone call, or a letter that tells you that you have won the lottery or a sweepstakes raffle or asks you to participate in a seemingly legit raffle. Con artists have also become very good at using sophisticated technology to create counterfeit cheques and money orders to look like legitimate monetary instruments from authentic businesses or nonprofits.
In this article, we will clarify what is an online charity raffle, outline its key characteristics, provide tips to help you identify a scam, and inform you of the things you can do if you notice a raffle scam.
What is an online charity raffle?
An online charity raffle uses technology to sell tickets, select winners, and distribute prizes. 50/50 and Catch the Ace are the most common raffle types that charities and nonprofits use to raise funds. The great thing about these raffles is that they help support a worthy cause while giving participants a chance to win prizes. They are a great way to raise money, develop lasting relationships, build a supportive community, and foster engagement to attract new donors while retaining existing ones.
Donors obtain digital numbered tickets, each of which has a chance of winning a cash prize. The prizes or winnings make a portion of the total ticket sales. The remaining amount is then given away to the charity organizing the event.
Characteristics of a legit charity raffle
Here are some characteristic elements of a legit (or legally run) charity raffle run by authentic organizations:
- Real sweepstakes are free. This means that it is illegal for any organization to ask you to pay to participate or to increase your chances of winning. Organizations are also required to mention this within the sweepstakes mailings.
- The team behind a legit charity raffle will share certain key pieces of information with you. For example, whether entering the contest is free, the details of the prizes and their value, your odds of winning, and the process to redeem your prize.
- They never ask you to pay via wire transfer, gift cards, or cash—these are all ways through which you cannot track your funds. They also never rush you to into donating right away.
- They never tell you that your donation is tax-deductible when it's not.
How to spot a lottery or raffle scam
- Check the charity’s website and look for detailed program information and how they intend to use your donations. Be suspicious if this vital information is missing or incomplete.
- Rely on charity evaluators to find reports and ratings for the charity you want to donate to.
- Be wary of calls or emails claiming you were automatically entered in a raffle that you have never heard of before.
- You are asked to make a payment to collect the prize. Remember, usually, once a ticket is purchased, no additional payments need to be made to get the prize.
- Legally required information is missing from the contest form. This is usually found in the fine print and may include information such as start and end dates of the contest, methods of entry, prizes’ descriptions, and various other legal disclaimers.
- Look for your odds of winning. Be wary of organizations that don’t disclose this vital piece of information.
- Another red flag is if you are asked to provide sensitive personal or financial information such as your bank account details or social security number at the time of ticket purchase or while collecting your prize.
What to do if you notice a lottery or raffle scam
If you are unsure about an organization or think that you have been targeted by a scam, you should:
- Immediately report it to the FTC if you live in the United States or the Canadian Anti-Fraud Centre, if you live in Canada.
- Reach out to your state or provincial authorities for local consumer protection right away.
- If you have given out your personal information, visit IdentityTheft.gov and learn the steps you should take to protect yourself.
- Share the scam details with friends and family to help them avoid getting scammed.
Fraudsters trick people into parting with their money by banking on their goodwill to contribute to worthy causes. While most well-known raffles online are legitimate, it is always a good idea to do your due diligence before you decide to contribute.
Before making a donation or participating in a charity raffle, make sure to check with watchdogs like Charity Navigator, CharityWatch, and the Better Business Bureau’s Wise Giving Alliance to see how they rate an organization. Additionally, you can also contact the charity regulator in your state to verify the status of the organization you are planning to donate to.