I remember being taught that since there are people who willingly deceive others by pretending to be impoverished so that they will trick others into giving them Tzedakah, lends the public permission not to be obligated to give Tzedakah whenever asked (except for Purim). Does anyone know the source or have I misunderstood something.
You're probably thinking of Kesubos 68a:
היינו דאמר רבי אלעזר בואו ונחזיק טובה לרמאין שאלמלא הן היינו חוטאין בכל יום שנאמר (דברים טו, ט) וקרא עליך אל ה' והיה בך חטא
This is what Rabbi Elazar said: Come and let us appreciate the swindlers who ask for charity that they do not need, because were it not for them, who command our attention and receive our charity, we would be sinning every day in failing to properly support the truly poor, as it is stated: “Beware that there be not a base thought in your heart, saying: The seventh year, the year of release, is at hand; and your eye be evil against your needy brother, and you will not give him; and he cry to the Lord against you, and it be sin in you” (Deuteronomy 15:9). Because the swindlers take our money in the name of charity, we have an excuse of sorts for failing to fully meet the needs of the truly poor.