Tag: FTC

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NASCO Drafts Letter to FTC Regarding Impersonation Scams

On March 22, 2022 the NASCO Board responded to the FTC’s Advance Notice of Proposed Rulemaking (“ANPR”) by submitting the NASCO letter .  The FTC has stated that their ANPR is to combat government and business impersonation fraud and is intended to allow the FTC to seek strong relief for consumers in cases involving imposter scams.  The NASCO letter specifically requests that the FTC consider impersonation of charitable organizations and causes in its rulemaking.

https://www.nasconet.org/wp-content/uploads/2022/02/NASCO-Letter-to-FTC-2022-02-22-002.pdf

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Stopping Charity Fundraising Phone Scams: What Consumers Need to Know

This week, the Office of the Attorney General for the District of Columbia, along with the Federal Trade Commission (FTC) and 46 agencies from 38 states, shut down the operators of a massive and long-running charity fundraising phone scam. These scammers bombarded 67 million consumers with 1.3 billion deceptive fundraising calls (mostly illegal robocalls) and duped generous Americans into donating more than $100 million to charities that never delivered the services they promised.

Consumers received calls asking them to give to charities that supposedly supported homeless veterans, victims of house fires, breast cancer patients, or children with autism—but the fundraising companies making the calls knew that these organizations spent little or none of that money on the causes they claimed to support. Instead, the fundraising companies themselves kept as much as 90 cents out of every dollar they collected on behalf of the charities.

Under the terms of a settlement, which are now pending court approval, the remaining active group of companies behind this scam will be forced to shut down. The owners and senior managers of the fundraising companies will also be required to pay back hundreds of thousands of dollars they collected through the deceptive charitable solicitations, and funds will be directed to legitimate charities that support similar causes. Many of these individuals will be permanently barred from raising money for charity, telemarketing to sell goods or services, using robocalls in any form of telemarketing, using abusive calling practices, or making any misrepresentation about a product or service.

This group of scammers is being held accountable, but there are others out there. That’s why it’s important to donate wisely and make sure your donations to charity will make a difference.

Check out charities before you give
Here are things you can do to avoid scams and make sure charities you donate to are using your money the way you expect:
•Research a charity online through online independent sources like IRS Select Check, BBB Wise Giving Alliance, Charity Navigator, GuideStar, and the National Center for Charitable Statistics.
•Ask questions—a legitimate charity, or fundraising company calling on behalf of a legitimate charity, should be able to give you the organization’s official name, address, telephone number, mission, and information about how your charitable donation will be used.
•Search the charity’s name online with the words “scam” or “complaint.” See what other people say about it.

Warning signs—charities to avoid
Here are some warning signs that tell you that a charity may not be legitimate, and you should avoid donating to them:
•The charity makes vague sentimental claims and can’t tell you specifically how your donation will be used.
•The charity asks for your payment via a money order or cash. (Never donate using cash, gift card, or wire transfer. Use a credit card whenever possible.)
•The charity tries to rush you into donating immediately and offers to send a courier to collect your contribution.
•The organization uses a name that sounds very similar to another charity’s name. Scam artists often try to take advantage of names that sound or look like those of respected, legitimate charities, which is why it’s important to do some research.

If you see these warning signs or you’re just not sure about a charity, consider donating to another organization. There are many excellent organizations that will use your donations well.

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FTC Joins Four States in Action to Shut Down Alleged Sham Charity Funding Operation That Bilked Millions From Consumers | Federal Trade Commission

A sprawling fundraising operation that allegedly scammed consumers out of millions of dollars will be permanently banned from charitable fundraising along with its owner and others involved in its operation as a result of a lawsuit brought by the Federal Trade Commission and Attorneys General of New York, Virginia, Minnesota, and New Jersey.

The operation is made up of multiple companies all under the control of owner Mark Gelvan, along with his associates Thomas Berkenbush, William English, and Damian Muziani. The complaint filed by the FTC and the states alleges that the defendants served as the primary fundraisers for a number of sham charities that were the subject of numerous law enforcement actions.

The complaint alleges that the sham charities claimed to use consumers’ donations to help homeless veterans, retired and disabled law enforcement officers, breast cancer survivors, and others in need. In fact, these organizations spent almost none of the donations on the promised activities.

“This action puts fundraisers on notice:  the FTC will not only shut down sham charities, it will aggressively pursue their fundraisers who participate in the deception,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “If you’re giving to charity and want to make sure your donations count, start at ftc.gov/charity to learn how to spot the scams.”

“It is critically important that donors are able to trust that their contributions are being used as they intended, and not to line the pockets of individuals who exploit the generosity of others,” said New York Attorney General Letitia James. “My office will continue to work with partners such as the FTC and other states to take action that protects donors and charitable entities.”

The complaint alleges that as much as 90 percent of the money raised by the defendants for these sham charities went to the defendants themselves as payment for their fundraising services. What little money the charities did receive was rarely spent on any of their supposedly charitable missions, sometimes less than two percent.

According to the complaint, the defendants orchestrated the sham charities’ fundraising operations by soliciting donations, writing fundraising materials, and providing other key support to the sham charities. Defendants placed calls misrepresenting how donations would be used, and in many instances, the calls violated consumers’ do-not-call requests.

The defendants in the case, who have worked with each other for as long as 30 years, have been subject to numerous law enforcement actions dating back as far as 1996.

Under the proposed settlements, all of the defendants will be permanently prohibited from participating in any charity fundraising, and from deceiving consumers in any other fundraising effort, including for political action committees (PACs). The defendants will be required to clearly inform consumers at the time they ask for money that any donations are not charitable and not eligible for tax deductions. In addition, the defendants will be subject to significant monetary judgments and required to surrender assets as follows:

Gelvan, Outreach Calling, Inc., Outsource 3000, Inc., and Production Consulting Corp.: These defendants will be subject to a monetary judgment of $56,023,481, which is partially suspended based on their inability to pay. The corporate defendants will be required to surrender $45,386. Gelvan will be required to surrender $800,000, and will be required to sell two New Jersey properties he has a stake in and surrender any net proceeds of those sales.

Damian Muziani: Muziani will be subject to a monetary judgment of $484,172, which is partially suspended due to his inability to pay. He will be required to surrender $12,369.

Thomas Berkenbush: Berkenbush will be subject to a monetary judgment of $1,132,155, which is partiall suspended due to his inability to pay. He will be required to surrender $5,000.

William English: English will be subject to a monetary judgment of $873,293, which is partially suspended due to his inability to pay. He will be required to surrender $30,000. The terms of his settlement also prohibit him from participating in any fundraising activity of any kind.

The funds being surrendered by the defendants will be paid to the State of New York, which will contribute the funds on behalf of New York, Virginia, and New Jersey to legitimate charities that perform services that mirror those promised by the sham charities.

In the event any of the defendants either fails to surrender the amounts they owe or is found to have misrepresented their ability to pay, the full amount of their judgment would become payable immediately.

https://www.ftc.gov/news-events/press-releases/2020/09/ftc-joins-four-states-to-shut-down-alleged-sham-charity-operation

https://ag.ny.gov/press-release/2020/attorney-general-james-shuts-down-fundraising-operation-solicited-donations

https://www.oag.state.va.us/media-center/news-releases/1822-september-16-2020-herring-shuts-down-sham-charity-fundraising-operation-that-bilked-millions-from-consumers

https://www.nj.gov/oag/newsreleases20/pr20200916b.html