FTC AND STATES UNITE TO THWART FUNDRAISING FRAUD

May 21, 2003

MAY 21, 2003

CHARLES DOW, ATTORNEY GENERAL’S OFFICE, 207-626-8577

DAVID N. BRAGDON, DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION, 624-8525

 

            In the latest efforts to thwart fundraising fraud, the Federal Trade Commission, the Maine Attorney General’s Office, and the Maine Department of Professional and Financial Regulation today announced “Operation Phony Philanthropy,” a joint law enforcement and public education campaign by the FTC and state charities regulators to highlight fraudulent fundraising. 

Fraudulent solicitors preying upon the good will of donors misrepresent who they are and what they do with the funds they raise, often picking the most popular charitable causes such as support for police, firefighters, veterans, and terminally ill children to most effectively tug dollars from sympathetic and community-minded individuals.  The scam artists ultimately derail donors' charitable intentions, undermine the public's confidence in legitimate charitable fundraising, and, in turn, injure those legitimate nonprofit organizations that compete for a depleted pool of charity dollars.

               “Charitable contributions represent a significant public resource,” said Attorney General Rowe.  “The public must be able to trust that its donations will be used for purposes that donors intend to sponsor.”

            Phony fundraising appeals, often made over the telephone, target both consumers and individual business donors.  Cases announced today by the FTC and the states cover a range of deceptive tactics to solicit donations.  Deceptive fundraising remains a high profile problem that four FTC cases and several state actions seek to address.  In this type of deceptive fundraising, telemarketers for groups with names related to law enforcement or fire fighters play on the natural impulse of concerned citizens to support their local protectors.  Sometimes telemarketers misrepresent affiliation with local or county police or some other local institution, which the telemarketers falsely claim will benefit from a donation. 

In late 2002, the Maine Attorney General sued the Maine Volunteer Firefighters Fund and its paid telemarketer Advanced Marketing Consultants in Kennebec County Superior Court for similar conduct. The Maine Volunteer Firefighters Fund had no presence in Maine and in fact was owned and operated by Florida residents. As a result of the settlement, the Maine Attorney General recovered $10,000, which was used to train local volunteer firefighters.

            “Maine people respond generously to charitable appeals.  But before giving, donors should educate themselves about the organizations requesting contributions. It’s important to make sure that your hard-earned money is being used for the purpose intended,” said Governor John Baldacci.

In Maine, charitable organizations and professional solicitors are required to register with the Office of Licensing and Registration at the Department of Professional and Financial Regulation.   http://pfr.informe.org/webquery/LicLookup.aspx face="Times New Roman" size=3>

“If you are solicited for a charitable donation,” said Anne Head, director of the state’s licensing and registration office, “you should call the Office of Licensing and Registration to make sure the charitable organization and/or the professional solicitor is licensed by the State.” 

Registration information on all registered charities and solicitors is available online by accessing the Office’s home page at http://pfr.informe.org/webquery/LicLookup.aspx face="Times New Roman" size=3>., or by calling (207) 624-8624.  “Make sure your contribution goes to a registered charitable organization and that the professional solicitor has complied with the registration law,” said Head.

            According to the FTC and Attorney General Rowe, consumers who hear such promises of local benefit or particular program support, especially in a telephone solicitation or other high-pressure donation situation, should take the time to verify the claims.  Ask the solicitor how much of the donation will go to support the described programs.  Call the charity to make sure that it will really benefit from a donation.  Check to make sure the charitable organization and solicitor are registered with the Office of Licensing and Registration at http://pfr.informe.org/webquery/LicLookup.aspx face="Times New Roman" size=3>, and enter the name in the box marked “company.”  Check up on the charity www.guidestar.org or at the Better Business Bureau, www.give.org and report any deceptive solicitations to the Maine Attorney General and/or the FTC at 1-877-382-4357.

“Operation Phony Philanthropy” also launches a nationwide public education campaign. The FTC has prepared and released a series of consumer and business education materials with tips on reducing the risk of being victimized by deceptive solicitations.  Included is a new publication for caregivers of seniors who are subject to abusive solicitations, including repeated telephone solicitations or high volume direct mail solicitations.  Also available is a brochure for nonprofit organizations that may be considering hiring a professional fundraiser.  Copies of these publications are available from the FTC’s Web site at: http://www.ftc.gov/charityfraud .  To file a complaint or to get free information on wise giving, call the FTC toll-free, 1-877-FTC-HELP (1-877-382-4357).

Tips for consumers and businesses include:

        Be wary of appeals that tug at your heart strings, especially pleas involving patriotism and current events.  Check to make sure the donation will support the described program.

        Ask for the name of the charity if the telemarketer does not provide it promptly.

        Ask what percentage of the donation is used to support the causes described in the solicitation, and what percentage is used for administrative costs.

        If the telemarketer claims that the charity will support local organizations, call the local groups to verify.

        Avoid cash gifts.  They can be lost or stolen.  For security and tax record purposes, it’s best to pay by check, made payable to the beneficiary, not the solicitor.

        If you do not wish to be called again by a fundraiser, ask to be placed on that fundraiser’s “do not call” list.  The FTC’s Telemarketing Sales Rule requires professional fundraisers to establish an in-house list of individuals who do not wish to be called again.  If the fundraiser ignores your request, report the problem to the FTC.

        Report suspicious solicitation calls.  Call your state’s charity regulator or the FTC at 1-877-FTC-HELP (1-877-382-4357).  Make sure to include the name of the nonprofit or the fundraiser and information about what the donation was supposed to support.

        IF YOU HAVE ANY UNANSWERED QUESTIONS ABOUT A CHARITY OR IF YOU ARE SUSPICIOUS ABOUT ITS LEGITIMACY, DO NOT GIVE YOUR MONEY TO IT. 

* * * * *