Facts for Consumers, by Federal Trade Commission

For those absolutely devoid of scruples, charity fraud is the field par excellance, in which you can simultaneously harvest kudos for your humanitarianism and make off with vast bundles of untaxed cash. Convictions for charity fraud are so rare as to be nonexistent, so any criminals operating in other fields of endeavor are incurring unnecessary risks.

Facts for Consumers, by Federal Trade Commission

Postby admin » Fri Aug 29, 2014 11:03 pm

Facts for Consumers
by Federal Trade Commission



Charitable Donations: Give or Take?

Your charity dollars are an investment in your community, the nation, and the world. The Federal Trade Commission (FTC), the nation’s consumer protection agency, says it’s wise to be cautious when making your donation decisions so you can avoid scam artists who try to make money by taking advantage of your generosity.

Charity Checklist

Consider the following precautions to help ensure that your donation dollars benefit the people and organizations you want to help. They make sense whether you’re solicited by an organization’s employees, volunteers, or professional fundraisers by phone, mail, e-mail, or in person.

Be wary of charities that spring up overnight in connection with current events or natural disasters. They may make a compelling case for your money, but as a practical matter, they probably don’t have the infrastructure to get the donations to the affected areas or people.

Ask for written information about the charity, including the name, address, and telephone number. A legitimate charity or fundraiser will send you information about the charity’s mission, how your donation will be used, and proof that your contribution is tax deductible.

Contact the office that regulates charitable organizations and charitable solicitations in your state to see if the charity or fundraiser must be registered. If so, check to make sure that the company you’re talking to is registered. For a list of state offices, visit the National Association of State Charity Officials at http://www.nasconet.org/agencies. Your state office also can verify how much of your donation goes to the charity, and how much goes to fundraising and management expenses.

Don’t be shy about asking who wants your money. Some charities hire professional fundraisers for large-scale mailings, telephone drives, and other solicitations rather than use their own staff or volunteers, and then use a portion of the donations to pay the fundraiser’s fees. If you’re solicited for a donation, ask if the caller is a paid fundraiser, who they work for, and the percentage of your donation that will go to the charity and to the fundraiser. If you don’t get a clear answer — or if you don’t like the answer you get — consider donating to a different organization.

Call the charity. Find out if the organization is aware of the solicitation and has authorized the use of its name. If not, you may be dealing with a scam artist.

Check with local recipients. If giving to local organizations is important to you, make sure they will benefit from your generosity. If a charity tells you that your dollars will support a local organization, like a fire department, police department, or hospital, call the organization to verify the claim.

Watch out for similar sounding names. Some phony charities use names that closely resemble those of respected, legitimate organizations. If you notice a small difference from the name of the charity you intend to deal with, call the organization you know to check it out.

Know the difference between “tax exempt” and “tax deductible.” Tax exempt means the organization doesn’t have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return. Even if an organization is tax exempt, your contribution may not be tax deductible. If a tax deduction is important to you, ask for a receipt showing the amount of your contribution and stating that it is tax deductible.

Look twice at organizations that use meaningless terms to suggest they are tax exempt charities. For example, the fact that an organization has a “tax I.D. number” doesn’t mean it is a charity; every nonprofit and for-profit organization must have a tax I.D. number. And an invoice that tells you to “keep this receipt for your records” doesn’t mean that your donation is tax deductible or that the organization is tax exempt.

Trust your gut — and check your records if you have any doubt about whether you’ve made a pledge or a contribution. Callers may try to trick you by thanking you for a pledge you didn’t make. If you don’t remember making the donation or don’t have a record of your pledge, resist the pressure to give.

Refuse high pressure appeals. Legitimate fundraisers generally don’t push you to give on the spot.

Be wary of charities offering to send a courier or overnight delivery service to collect your donation immediately.

Consider the costs. When buying merchandise or tickets for special events, or when receiving “free” goods in exchange for giving, remember that these items cost money and generally are paid for out of your contribution. Although this can be an effective fundraising tool, less money may be available for the charity.

Be cautious of promises of guaranteed sweepstakes winnings in exchange for a contribution. According to U.S. law, you never have to give a donation to be eligible to win a sweepstakes.

Do not send or give cash donations. Cash can be lost or stolen. For security and tax record purposes, it’s best to pay by check — made payable to the charity, not the solicitor. If you’re thinking about giving online, look for indicators that the site is secure, like a lock icon on the browser’s status bar or a URL that begins “https:” (the “s” stands for “secure”).

Checking Up

Before you open your checkbook, check out the charity you’re considering with these organizations. Note: Many small, new, or local charities may not be rated by the organizations listed here. Some fraternal organizations, like police and firefighter groups, may not be rated at all. If the charity seeking your donation is not listed or rated, follow the precautions listed under the Charity Checklist to help you determine whether it merits your donation dollars.

BBB Wise Giving Alliance
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203
(703) 276-0100

American Institute of Philanthropy
P.O. Box 578460
Chicago, IL 60657
(773) 529-2300

Charity Navigator
1200 MacArthur Boulevard
Mahwah, NJ 07430
(201) 818-1288

4801 Courthouse Street, Suite 220
Williamsburg, VA 23188
(757) 229-4631

Military Relief Societies
Although the U.S. Department of Defense does not endorse any charity, you can learn about military relief societies at

Reducing Telephone and Direct Mail Solicitations

Typically, when you donate to a charity, your name is placed on the charity’s contact list. The charity uses this list to contact you again for future donations, and often rents the list or exchanges it with other charities and fundraisers. If you feel overwhelmed with requests for donations, here are some steps you can take.

Tell the charity to put you on their “do not call” list. By law, the charity must not contact you again. If it does, report it to your state Attorney General (http://www.naag.org) or your local consumer protection agency (http://www.consumeraction.gov). You can get the phone numbers for these organizations in your phone book or through Web directories.

Include a note with your donation asking the charity not to rent, sell, or exchange your personal information and donation history.
Ask the organization to limit its donation requests to you to once or twice a year. If the organization fails to honor your requests, you may wish to find a different charity to support.

Sign up for the Direct Marketing Association’s (DMA) Mail Preference Service (MPS) at http://www.dmachoice.org. The DMA’s MPS lets you opt out of receiving unsolicited commercial mail from many national companies for five years. When you register with this service, your name will be put on a “delete” file and made available to direct-mail marketers. However, your registration will not stop mailings from organizations that do not use the DMA’s Mail Preference Service. The DMA also has an Email Preference Service to help you reduce unsolicited commercial emails. To opt out of receiving unsolicited commercial email from DMA members, visit http://www.ims-dm.com/cgi/offemaillist.php. Your online request will be effective for five years.

Sign up for the National Do Not Call Registry — the free, easy way to reduce the telemarketing calls you get. While charities are exempt from the FTC’s Telemarketing Sales Rule that implemented the Registry, some will not call you if they know you don’t want to receive calls. To register your telephone number, or to get more information, visit http://www.donotcall.gov, or call 1-888-382-1222 from the phone you want to register. You will receive fewer telemarketing calls within three months of registering your number. Telephone numbers on the Registry will be removed when they are disconnected and reassigned, or when you choose to remove your number(s) from the Registry.

Telemarketing Sales Rule

The FTC’s Telemarketing Sales Rule applies to telemarketers who make calls across state lines on behalf of charitable organizations. The Rule restricts calling times to the hours between 8 a.m. and 9 p.m. The Rule also requires telemarketers to promptly identify the charitable organization they represent and to disclose that the purpose of the call is to ask for a contribution. Telemarketers may not mislead you or lie to get your contribution.

For More Information and Complaints

To learn more information about making your donations count, visit http://www.ftc.gov/charityfraud.

If you believe an organization may not be operating for charitable purposes, or is making misleading solicitations, contact your state Attorney General (http://www.naag.org) or your local consumer protection agency (http://www.consumeraction.gov). You can get the phone numbers for these organizations in your phone book or through Web directories.

You also may file a complaint with the Federal Trade Commission.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
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Re: Facts for Consumers, by Federal Trade Commission

Postby admin » Fri Aug 29, 2014 11:05 pm


For Release: 05/20/2009

FTC Announces “Operation False Charity” Law Enforcement Sweep

Agency Joined by 49 States in Bringing 76 Actions Against Fraudulent Solicitors Nationwide

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 49 states and the District of Columbia, today 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.

“In these difficult economic times, Americans want to make every contribution count,” said FTC Chairman Jon Leibowitz. “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.”

“All of us share a deep trust and respect for our law enforcement officers, firefighters, and military service members,” said Attorney General Chris Koster of Missouri. “The attorneys general across the country will not stand idly by while greedy telemarketers take advantage of that trust and respect.”

“I encourage all donors to maximize their charitable contributions by getting basic financial information about an organization before giving,” said Pennsylvania Secretary of State Pedro A. Cortés. “Trustworthy resources are available through your department of state or attorney general’s office. By doing research and asking questions of a charity or its professional fundraisers, consumers can help ensure their donations have the impact they expect.”

FTC Enforcement Actions

The two FTC cases announced today 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.

In the first case, the FTC alleged that three sham non-profit organizations, American Veterans Relief Foundation, Inc. (AVRF), Coalition of Police and Sheriffs, Inc. (COPS), and Disabled Firefighters Fund (DFF), all based at the same address in Santa Ana, California, were created almost entirely to provide profits for the individual defendants and the for-profit fundraisers they hired. One defendant, Jeffrey Dean Duncan, ran COPS and DFF, while another defendant, William Rose, ran AVRF. Another defendant, Kathy Clinkenbeard, managed the telemarketers with which the entities contracted. The FTC contends that solicitors calling on behalf of AVRF falsely claimed that the money they were raising would support the families of soldiers fighting overseas through a program it called “Operation Home Front.” In fact, AVRF spent virtually no money assisting military families. AVRF’s bogus “Operation Home Front” is not connected to the genuine non-profit Operation Homefront, Inc., a national organization with 30 chapters across the country that provides real support to the families of troops and gets high ratings from watchdog groups.

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 COPS misrepresents 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. Finally, the order imposes on defendants COPS, DFF, Duncan, and Clinkenbeard a judgment of $13.1 million and against defendants AVRF, Rose, and Clinkenbeard a judgment of $6 million. These judgments are suspended based on defendants’ documented inability to pay.

In the second case, the FTC alleged that defendant David Scott Marleau ran several for-profit fundraisers that solicited money on behalf of sham police, fire, and veterans non-profit charitable organizations. The FTC charged that Marleau and his companies, Jedi Investments, LLC, Impact Fundraising, LLC, Millenium Fundraising, LLC, and PC Marl, Inc., misrepresented the programs for which funds were solicited, misrepresented that donations would benefit the donor’s local community, mailed notices to consumers stating they had made a pledge when they had not even been called, and misrepresented their affiliation with sheriffs and police. Six additional counts in the complaint charged the defendants with multiple violations of the FTC’s Telemarketing Sales Rule, including ignoring company-specific do-not-call requests. The Commission also alleged that their operations often targeted seniors, sometimes debiting their accounts for donations without permission.

The proposed order settling the charges requires the defendants to stop misrepresenting facts, make certain disclosures when soliciting money from consumers, and stop violating the Telemarketing Sales Rule. The order also requires that the defendants substantiate any claims they make about a nonprofit or its programs prior to soliciting consumers, and requires that they train and monitor their telemarketers. Finally, the order imposes a monetary judgment of nearly $1.7 million against the corporate entities Jedi Investments, LLC, Impact Fundraising, LLC, Millenium Fundraising, LLC, and PC Marl, Inc. That judgment is suspended based on these defendants’ documented inability to pay.

The FTC would like to thank the Attorneys General of California, Idaho, Oregon, and Washington and the Secretary of State of Washington for their invaluable assistance with these cases.

State Law Enforcement and Public Education

Law enforcement and public education efforts by the states are integral components of “Operation False Charity.” The FTC would like to acknowledge the following state officials for their participation in Operation False Charity, either by taking enforcement action or initiating consumer education efforts: the Attorneys General of Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming; and other state agencies including the Secretaries of State of Colorado, Georgia, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, West Virginia, and Washington, and the Georgia Governor’s Office of Consumer Affairs, the New York State Consumer Protection Board, the Rhode Island Department of Business Regulation, the Utah Division of Consumer Protection, the Virginia Department of Agriculture and Consumer Services, and the Eu Claire County (Wisconsin) District Attorney.

Information about these agencies’ participation is summarized on the FTC’s Web site at www.ftc.gov/os/2009/05/090520charitychart.pdf

Private-sector partners included AARP, the Better Business Bureau Wise Giving Alliance, the American Institute of Philanthropy, Guidestar, the National Association of State Charities Officials, and Charity Navigator.

Consumer Education

The FTC today 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

The Commission vote approving each complaint and proposed court order was 4-0. The complaint and proposed order against David Scott Marleau, et al. were filed in the U.S. District Court for the Western District of Washington on May 19, 2009. The complaint and proposed order against American Veterans Relief Foundation, Inc., et al. were filed in the U.S. District Court of the Central District of California on May 18, 2009.

The proposed orders announced today settle the FTC’s charges against the following defendants: 1) American Veterans Relief Foundation, Inc.; Coalition of Police and Sheriffs, Inc.; Disabled Firefighters Fund; Jeffrey Dean Duncan, individually and as an officer or director of Coalition of Police and Sheriffs, Inc., and Disabled Firefighters Fund; Kathy Clinkenbeard, individually; and William Rose, individually and as an officer or director of American Veterans Relief Foundation, Inc.; and 2) David Scott Marleau, individually and as an officer or director of Jedi Investments, LLC, Impact Fundraising, LLC, Millenium Fundraising, LLC, and PC Marl, Inc.; Jedi Investments, LLC; Impact Fundraising, LLC; Millenium Fundraising, LLC; and PC Marl, Inc.

NOTE: The Commission authorizes the filing of complaints when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaints are not a finding or ruling that the defendants actually have violated the law.

NOTE: Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the complaints and proposed court orders are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

Peter Kaplan
FTC Office of Public Affairs

Mitchell J. Katz
FTC Office of Public Affairs

David M. Horn
FTC Northwest Region, Seattle

Tracy S. Thorleifson
FTC Northwest Region, Seattle

Available on case list in press packet

(FTC File Nos. 092-3065 and 092-3064)
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