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By Barry McCarthy
President and CEO, Deluxe
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Giving Tuesday, a global day of donating, falls on the Tuesday after Thanksgiving every year. Ironically, this day lands immediately after the two of the biggest shopping days of the year, Black Friday and Cyber Monday. Serving as the official kickoff of the giving season, Giving Tuesday is followed by the winter holiday season, during which many make their end-of-year donations.
Last year, 35 million Americans donated $3.1 billion on Giving Tuesday. Based on previous annual growth patterns, we can expect to see anywhere from $3.5 billion to $5.1 billion in total this year on Giving Tuesday, which falls on Nov. 28. Holidays cause people to feel more generous and therefore more willing to give to others.
Most Americans don't think of Giving Tuesday as a security risk or a day that criminals prey on unwitting donors and charities, but without new technologies used by payment processors and financial institutions, millions of donors' personal information and the billions of dollars they donate are at risk of being stolen.
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According to the IRS, donors should never give numbers from a gift card or wire money because these methods are difficult to track, and it is often impossible to recover spent funds. Instead, people are encouraged to use a credit card or check, each of which is a more secure and trackable payment method. Credit card payments can also be reversed. Payment processors can flag potential security threats before they happen when a debit or credit card is used.
A study from IT firm Trinity Solutions, Inc. found that people clicked on supposed Giving Tuesday links on their smartphone, or a pop-up on their computer, that directed them to a fraudulent charity website. Instead, donors should go directly to the charity's website to donate. Most charities also set up donations using text messaging—also found on their website.
A number of credit cards allow customers to directly donate their rewards to charities like UNICEF, the Red Cross, and St. Jude Children's Research Hospital. They provide full lists of participating charities on credit card websites. American Express, Citi, and Discover even have direct donation features in their rewards redemption portals.
Last year, the IRS held a Security Summit with software companies, accounting firms, payroll processors, state tax administrators, and financial institutions. The purpose was to discuss ways to combat identity theft refund fraud. The summit partnership included 42 state agencies and 20 industry offices organized into six work groups, each tasked with addressing an area of need and each with a co-lead from the IRS, states, and industry. Charities were a topic of concern due to the personal data of millions of donors at risk to hackers.
With AI and ever-increasing tools surfacing around the world, trustworthy payment processors that encrypt user information and utilize fraud protection are becoming a must for any charity.
Donors must also be able to donate when and how they want using online forms and digital wallets, with the option for recurring donations. Platforms like iATS have been around for 20 years handling billions in donations annually across the world for Oxfam, Make a Wish Foundation, Ronald McDonald House, and many other nonprofits. Their technology blocks over $64 million worth of fraud attempts per year on average.
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Across the U.S., nonprofits are focused on building relationships with donors when they donate during the largest giving day in order to encourage continuous giving without the fear of data theft.
According to the Federal Trade Commission, unknowingly, social media users have posted their favorite charity on Giving Tuesday, having no idea that the charity may itself be a scam. A tell-tale sign is if the charity asks for a donation right up front on the phone. These charities will also deliberately choose names or use website addresses that look almost the same as legitimate well-known charities.
A requirement before giving every year should also be reviewing what charity watchdog groups say about specific nonprofits. Charity Navigator and the Better Business Bureau's Wise Giving Alliance are also great resources with rankings and reviews.
Hopefully, this Giving Tuesday sees the dollars donated increase, while cases of fraud go down. It's vital that companies do their part to educate their customers about these simple ways to avoid getting scammed.
Barry McCarthy is president and CEO of Deluxe.
The views expressed in this article are the writer's own.
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