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Operation False Charity Law Enforcement Sweep

Operation False Charity Law Enforcement Sweep 

PIERRE, S.D.-  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, today announced “Operation False Charity.”  Federal and state enforcers announced 76 law enforcement actions against fundraising companies, nonprofits, and individuals. 

The South Dakota Attorney General’s Office participated in Operation False Charity by joining with at least 48 other states in reaching a settlement with professional solicitor/telemarketer, Community Support, Inc (CSI). CSI, which is based in Milwaukee, Wisconsin, solicits funds from consumers in South Dakota and nearly every state on behalf of over 35 charitable clients. Generally speaking CSI kept no less than 83% of all money donated, and in many cases as much as 90% of all donations, leaving just 10% for the charity.

The South Dakota case against CSI alleges that CSI had a pattern of consistently violating state laws over many years. Allegations include: 1) misrepresenting how much of the funds actually go to the charity, 2) misrepresented what would be spent in the call recipient’s local community, 3) harassed call recipients, 4) its callers falsely claimed to be law enforcement or veterans, 5)falsely claimed a person had made a pledge when they had not.

CSI has agreed to cease all of the conduct via a stipulated judgment under the settlement. In the stipulated judgment CSI will agree to cease every illegal and objectionable tactic discovered in the multi-state investigation and in the complaints received by the participating states. 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.

The FTC also announced several cases involving defendants who allegedly tricked consumers into giving by claiming that donations would support police or firefighters disabled in the line of duty or assist military families in need, and misleading consumers about how much of the money would  go to those causes.  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 trick consumers into contributing money that the defendants used overwhelmingly just to support themselves and their fundraisers. 

The Federal Trade Commission, the nation’s consumer protection agency, suggests that donors should avoid any charity or fundraiser that:

  • refuses to provide written information about its identity, its mission, its costs, and how the donation will be used;
  • will not provide proof that a contribution is tax deductible;
  • uses a name that closely resembles that of a better-known, reputable organization;
  • thanks a potential donor for a pledge the person doesn’t remember making;
  • asks a potential contributor for bank account or credit card information before the person has reviewed the organization’s information and agreed to contribute
  • uses high-pressure tactics to secure a donation before the potential donor has had a chance to make an informed decision about giving;
  • asks for donations in cash;
  • offers to offers to send a courier or overnight delivery service to collect the donation immediately;
  • guarantees sweepstakes winnings in exchange for a contribution.

Some of the sites where consumers can check the legitimacy of charitable organizations are:

www.bbb.us/charity
Better Business Bureau Wise Giving Alliance

www.charitynavigator.org
CharityNavigator

www.charitywatch.org
American Institute of Philanthropy

www.guidestar.org
Guidestar

Additional information about this charitable sweep can be found at the FTC website at http://www.ftc.gov/

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