If you run, or run campaigns to support, a charity that engages professional fundraisers, this latest enforcement action announced by the FTC should serve as an important cautionary reminder about the importance of due diligence.
The FTC recently announced a settlement with Associated Community Services (ACS) and a number of related defendants imposing a $110+ million judgment. The action, brought with 46 agencies from 38 states and D.C., involved a massive "telefunding" operation. As alleged in the complaint, the defendants not only conducted a robocall "onslaught" using soundboard technology to solicit donations, in violation of the Telemarketing Sales Rule, but they kept most of money they collected rather than provide it to the charities.
Further, according to the FTC, the charities on whose behalf the defendants purported to raise money were shams, which the defendants knew. The complaint states that "Defendants knowingly duped generous Americans into donating tens of millions of dollars to nonprofit organizations that they claimed helped breast cancer patients, the families of children with cancer, homeless veterans, fire victims, and more. In reality, almost no money went to the charitable purposes the Defendants described to donors."
Sham charities and sham fundraisers. Why relevant to legit marketers? Because legitimate marketers engage in charitable campaigns of all kinds: touting their own donations; commercial co-venturing; including a "donate here" button at an e-commerce register; and more. And while it may be that the activities described in this enforcement action are so extreme and so obviously fraudulent that they're not representative, the message to everyone should still be clear: do your homework.
Is the charity you're supporting the real deal, or does it just have a name that sounds like the real one? What do its financials look like? Is it actually spending its money on its stated mission? And what about the fundraisers engaged on its behalf? Are they actually fundraising for the charity or for themselves? And what methods are they using to conduct their fundraising activities: are they compliant? Has the charity or the fundraiser been the subject of enforcement actions or complaints? These issues should be top of mind for any brand partnering with a charity, or raising money on its behalf.
(Description of graphic for visually impaired readers: a drawing of a badge urging donations.)
Originally Published by Frankfurt Kurnit, March 2021
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