General Gansler, Secretary of State McDonough Join FTC in Announcing "Operation False Charity" Law
FTC and States Join to Fight Fundraising Fraud
BALTIMORE, MD (May
20, 2009) – Attorney General Douglas F. Gansler and Secretary
of State John P. McDonough today joined the Federal Trade Commission
in announcing a nationwide crackdown on fraudulent charitable
solicitors claiming to help police, firefighters, and veterans. “Operation
False Charity” is a joint law enforcement and public education
campaign by the FTC, Attorneys General and Secretaries of State
from across the country to highlight fraudulent fundraising.
take advantage of the good will and generosity of donors by misrepresenting
who they are and what they intend
to do with the funds they raise, often picking the most popular
charitable causes - support for police or firefighters and their
families, veterans relief, terminally ill children - to most effectively
obtain money from sympathetic individuals. The scam artists ultimately
undermine the public’s confidence in legitimate charitable
fundraising and injure those legitimate nonprofit organizations
that compete for a depleted pool of charity dollars.
“There are many reliable charities that rely upon generous
contributions from the public to carry out their work,” said
Attorney General Gansler. “We all need to feel confident
that our donations will be used for the intended charitable purpose.
I encourage everyone to do their homework to ensure that the charities
they choose to support are legitimate.”
In making today’s announcement, Attorney General Gansler
announced a multi-state settlement with Community Support, Inc.
(CSI), a national professional fundraiser. CSI solicits funds from
consumers in nearly every state on behalf of over 35 charitable
clients. CSI kept at least 83% of all money donated, and in some
cases kept 90% of all donations, leaving just 10% for the charity.
In addition, the multi-state investigation revealed that CSI often
made statements that could mislead Maryland residents about how
donations were spent, how much of each donation would go to the
stated charitable purpose, and whether CSI’s employees were
members of veterans, fire, or police officer groups. Under the
terms of the settlement, CSI has agreed to halt its deceptive practices.
Violations of the settlement may result in penalties of $10,000
violation. CSI also agreed to reimburse the participating states
$200,000 for the costs of the investigation.
With more information readily available over the Internet, consumers
have the tools to check out a charity before they decide to donate.
To make the best use of your charitable dollars, always follow
these three rules:
- Check with the Maryland
Secretary of State’s
Office at 1-800-825-4510 before donating to be sure the charity
- Never agree to give money over the phone. Ask the
caller for written information about the charity and read it
before making your
- Find out what percentage
of your donation actually goes to the charity’s mission.
These days, many charities solicit money by telephone. Telephone
solicitations can be legitimate requests for money, but it is
possible the caller does not represent a genuine charity. Unscrupulous
callers want to get your money fast. They often ask for a credit
card number or offer to send a courier to pick up your check
before you can change your mind. When solicited by phone, always
ask the caller to send you written material about the charity.
Even if the charity has an urgent need for money, the need will
still exist after you read what they’ve sent. Before you
give, make sure you know:
- The full name, address and phone number
of the charity.
- If the charity (and paid fund-raiser, if one
is used) is registered with the Maryland Secretary of State.
- How much of your donation goes to the charity and how much
goes to the fund-raiser.
- For what purpose your contribution will
- If your contribution is tax deductible.
How is Your Money Used?
Some charities use paid fund-raisers to contact you for a donation.
These fundraisers may keep a portion of your gift as their fee.
Find out how much of your gift goes to the charity. You might
be better off to send your check directly to the charity and
by-pass the fundraisers. The Charitable Organizations Division
of Maryland’s Secretary of State’s Office has a master
list of 8,726 registered charities and can provide information
- The purpose of a charity.
- The amount of money a charity raises.
- The percentage of the
money collected that is used for charitable program services.
- The percentage that is used for administrative costs and fundraising.
Some solicitations should raise immediate red flags. Be wary if:
- The organization refuses to send you written material or financial
- The solicitor offers to send a courier to collect
- You receive an invoice or bill for a pledge
you never made.
- The organization’s
name and logo closely resemble another charity with a similar
Bogus charities frequently use names that resemble those of well-known,
legitimate organizations. The only way to be sure a charity is
legitimate is to do some research before you give. Donors have
the right to ask as many questions as necessary to make an informed
decision about whether or not to donate. If the charity you are
considering resists answering your questions, don't give.
If you have any questions
concerning a charity, call the Charitable Organizations Division
of the Maryland Secretary of State’s
office at 1-800-825-4510 or the Attorney General’s Consumer
Protection Division at 1-888-743-0023.