FTC to Crack Down on Fraudulent Charity Telemarketers

In a nationwide, federal-state crackdown on fraudulent telemarketers claiming to help police, firefighters, and veterans, the Federal Trade Commission, together with 61 Attorneys General, Secretaries of State, and other law enforcers of 48 states and the District of Columbia, announced “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. These include two FTC actions against alleged sham non-profits and the telemarketers who made deceptive claims about these so-called charities. The FTC and state agencies also released new education materials, in both English and Spanish, to help consumers recognize and avoid charitable solicitation fraud.

The two FTC cases involve federal court complaints and proposed settlement orders against defendants who allegedly tricked consumers into giving by claiming that donations would support police or firefighters disabled in the line of duty, often in the donors’ communities, or that the donations would assist military families in need, and by misleading consumers about how much of the money would go to those causes. According to the FTC, the defendants used legitimate-sounding names and described sympathetic causes to give their sham organizations a veneer of credibility. Their real goal, however, was to dupe consumers into contributing money that the defendants used overwhelmingly just to support themselves and their fundraisers.

According to the FTC’s complaint, the defendants misrepresented that donations would go to a legitimate charity, that the organizations have programs that do not actually exist, and that those programs benefit the donors’ local communities. The complaint also alleges that the defendants misrepresented its affiliation with police officers and sheriffs, and charges the defendants with assisting others to commit deceptive acts and practices.

The proposed order settles the FTC’s complaint by barring the defendants from making false claims, or assisting anyone else in making false claims, in connection with charitable solicitations, or in connection with telemarketing. It also prohibits the defendants from violating the Telemarketing Sales Rule, requires that they make certain disclosures when fundraising, and it requires that they monitor any fundraisers that solicit on their behalf. 

The FTC also issued a new consumer alert providing tips about charities that solicit donations on behalf of veterans and military families. According to the alert, which can be found on the agency’s Web site at www.ftc.gov/charityfraud, while many legitimate charities are soliciting donations to support the nation’s military veterans, not all “charities” are legitimate – some are operators whose only purpose is to make money for themselves. Others are paid fundraisers whose fees can use up most of your donation.

The new alert, “Supporting the Troops: When Charities Solicit Donations on Behalf of Vets and Military Families,” offers the following tips to help consumers ensure that their donations go to a legitimate charity. Many of these tips apply to charitable giving to other types of organizations, as well.

• Recognize that the words “veterans” or “military families” in an organization’s name don’t necessarily mean that veterans or the families of active-duty personnel will benefit from your donation.
• Check out an organization before donating. Some phony charities use names, seals, and logos that look or sound like those of respected, legitimate organizations.
• Donate to charities with a track record and a history. Charities that spring up overnight may disappear just as quickly.
• If you have any doubt about whether you’ve made a pledge or a contribution, check your records. If you don’t remember making the donation or pledge, resist the pressure to give.
• Call the office in your state that regulates charitable organizations to see whether the charity or fundraising organization has to be registered.
• Do not send or give cash donations. For security and tax-record purposes, it’s best to pay with a check made payable to the charity.
• Ask for a receipt showing the amount of your contribution.
• Be wary of promises of guaranteed sweepstakes winnings in exchange for a contribution. You never have to give a donation to be eligible to win a sweepstakes.

Some sites where consumers can check out a charity include:

*www.nasconet.org – National Association of State Charity Officials, where you can look up and contact your state’s charities regulator for more information.

*www.guidestar.org – Guidestar

*www.bbb.org/charity – Better Business Bureau Wise Giving Alliance

*www.charitynavigator.org – CharityNavigator

*www.charitywatch.org – American Institute of Philanthropy