The Scam: A New Jersey man claims he’s acting on behalf of a charity, advertises local car donation center giving out tax deductions.
In this particular case, vehicle donors saw billboards, direct mailings, and advertisements leading them to believe that the man behind “Ray of Hope” had the authorization to accept car donations on behalf of the charity. In actuality, a used car dealership was posing as a representative for the charity and accepting free vehicles from unknowing donors.
How you can avoid this car donation scam: To avoid organizations piggy backing on the good name of charities, check up on car donation programs online by visiting the official charities website (one that usually ends in .org, unless they’re partnered with an official processing center) or by checking them out on Charity Navigator to find out more about the registered charity and to ensure that the agent actually works for them. To find out if your donation is tax deductible, know that only 501(3)(c) status charities (which you can also see on Charity Navigator) are legally able to give tax deductions for your car donation.
The Scam: 99% of vehicle donation proceeds went straight into the pockets of upper level management at a Veteran’s charity in Florida.
When the IRS declares a nonprofit with 501(3)(c) status, they require all tax documents to be filed publicly. In Florida, an association claiming to support vets accepted vehicle donations from donors; the 4.5 million in proceeds going to 83 internal staff members, which worked out to a cool $54,000 a year for each employee. Publicly, the charity admitted that 1% of the proceeds actually went to needy vets and 99% went towards “administrative costs”.
How you can avoid this car donation scam: Asking how and where the money will be spent is one of the most important questions you can ask your charitable organization. Visit the charities website and consider calling their customer service line to inquire about how your vehicle donation would be spent. Legitimate charities should have no problem breaking down where the money will be spent.
The Scam: 1,000 people donated their car to a cleverly named vehicle auction facility in California.
The perpetrators of this scam called their fake charity “Stamp Out Child Abuse” and advertised for San Diego residents to donate their cars and stop child abuse. By getting involved with a cause that people want to help fix, the “charity” tugged at donors heart strings, took their vehicles for free and resold them for profit.
How you can avoid this car donation scam: Be skeptical of too-cute sounding names or clever spins on existing charity names (like Habitat for Humans instead of Habitat for Humanity) or organizations that you’ve simply never heard of. Advertisements can’t paint a complete picture of an organization, so research the organization online extensively or consider talking to family members or co-workers about any experiences they might have had with the organizations you’re interested in.
The Scam: A car donor in Hawaii receives over $495 in tickets two years after donating her vehicle to charity.
When a HI vehicle donor got a new vehicle and decided to donate her old car to charity – she had no idea how to properly sign her vehicle title over to the charity and thus her title was left blank. When the vehicle was resold, the title was never put in the new owner’s name. The donor was charged for the current owners tickets when the Traffic Violations Bureau linked the parking tickets to the registered owner, which was still in the vehicle donor’s name.
How you can avoid this car donation scam: Under no circumstances should the buyer/purchaser/transferee sections of the title be left blank at the request of the charity. A legitimate charitable organization not only requires the vehicle title be turned into them, but requires you to transfer the title to them properly by filling out certain sections of your title (see our state specific information on filling out your title here if you have questions on signing over your title). Charities that tell you it will be more work and money for the charity if you don’t leave your title blank are scam artists; every time your vehicle changes hands it should be legally transferred on the vehicle’s title. Similarly, charities who don’t ask for your title at all, do not have your best interests in mind, as you will still be the registered owner, even after you no longer have the vehicle in your possession.
The Scam: In Wisconsin, an unregistered charity was giving out tax deductions and vacation vouchers to people who donated their vehicle.
In order to advertise or solicit for charitable donations, most states require organizations to register as fundraisers so that the state can regulate the legitimacy of the organization . In Wisconsin, “Heritage for the Blind” was advertising for car donations on an expired license from five years ago, promising trips in return for donated vehicles.
How you can avoid this car donation scam: In addition to checking up on the legitimacy of your charity, also be wary of goods or services promised for your car donation. The IRS states that you are only allowed to deduct the fair market value of your deduction, minus any goods or services received, regardless of whether the company promises they have no legal value. If you donate a car to a charity who promises you free vacation vouchers, you are required to take the fair market value of the vehicle minus the worth of the vacation vouchers and that is your tax deductible donation (consult your tax adviser for more details).
Car donations through Car Donation Wizard uphold the true values every donor should expect from their vehicle donation program. For instance, Car Donation Wizard is the legal agent for reputable, legitimate 501(3)(c) charities who actually use the proceeds of your vehicle donation toward their cause or mission. Car Donation Wizard also returns 75-85% of the gross proceeds from each vehicle donated back to the charity – that’s more than any other vehicle donation program can say. Visit us online to learn more about the charities that we work with and let Car Donation Wizard to help make your vehicle donation experience a positive one.