Attorneys General Crack Down on Charities that Cheat

State Attorneys General joined the Federal Trade Commission (FTC), secretaries of state and other law enforcers May 20 to crackdown on fraudulent telemarketers claiming to help police, firefighters, and veterans in a law enforcement sweep dubbed “Operation False Charity.”

Federal and state enforcers announced 76 law enforcement actions against 32 fundraising companies, 22 non-profits or purported non-profits on whose behalf funds were solicited, and 31 individuals.

“Today, 48 states and the District of Columbia are launching lawsuits or enforcement actions against those who use the good names of our most trusted public servants for their own personal gain,” Missouri Attorney General Chris Koster said at the May 20 Washington, DC press conference. “From Washington state to Florida, Attorneys General across the country are taking a stand against charities that collect large sums of money generously donated by citizens, only to keep those vast sums for themselves, rather than distributing them to the promised beneficiaries.”

In one action, 33 states joined together to investigate Community Support, Inc., or “CSI” over their misleading fundraising practices. It solicits funds from consumers in nearly every state on behalf of more than 35 charities. CSI called people seeking donations for charities it contracted with, including Disabled Police Officers of America and National Vietnam Veteran’s Foundation. The contracts that CSI had with the charities provided that CSI would receive between 83 percent to 90 percent of the amount raised, leaving little left for the charities.

Under the settlement, a consent judgment will be entered against CSI enjoining it from engaging in specific deceptive fundraising practices. In addition, CSI will have to regularly report information to the states and be more responsible for its employees’ training and conduct and representations made to consumers. Violations of the settlement may result in penalties of $10,000 per violation. CSI also must reimburse the states $200,000 for the costs of the investigation.

“In these difficult economic times, Americans want to make every contribution count,” said FTC Chairman Jon Leibowitz, whose agency filed two enforcement actions. “The good news is they’re still being generous and donating to charitable organizations, including those that support our police officers, firefighters, military families, and veterans. The bad news is that some unscrupulous operators have seized on this goodwill to make a quick buck. The actions we’re announcing today demonstrate that federal and state partners will find charity scammers and we will stop them.”

State Attorneys General and the FTC also released new education materials to help consumers recognize and avoid charitable solicitation fraud. For more information, go to your state Attorneys General Web site, http://www.naag.org/attorneys_general.php or the FTC Web site, www.ftc.gov.

red logo

Missouri Attorney General Chris Koster, left, talks to FTC Chairman Jon Leibowitz before Operation False Charity press conference.
Missouri Attorney General Chris Koster, left, talks to FTC Chairman Jon Leibowitz before Operation False Charity press conference.