Michigan Fundraiser Ordered To Change Practices

When a smooth talking telemarketer calls you on behalf of a local charity, it's tempting to think you're dealing directly with the local women's club, the food pantry or the firefighters who protect your property.

In nearly all cases, you aren't. The person on the other end of the line could be hundreds of miles away and never set foot in your town, much less even know where it is. Consumer authorities are always on the lookout for professional fundraisers who actively suggest they are part of the organization for whom they are soliciting.

Iowa settlement

Iowa Attorney General Tom Miller has reached an agreement with a Michigan-based professional fundraiser he accused of violating Iowa's Consumer Fraud Act. The company has agreed to change its marketing practices, comply with Iowa's consumer fraud laws, and will pay $35,000 to the state's consumer fraud enforcement fund as part of the settlement. with the Attorney General's Consumer Protection Division.

Miller said Associated Community Services (ACS), of Southfield, Michigan, solicited donations from Iowans on behalf of various organizations. Thanks to the agreement, worked out in court, ACS will not state or imply that its paid telephone solicitors are members of, employees of, or are volunteers at charity organizations.

In the future, ACS must tell potential donors that it is a professional fundraiser and, if less than 50 percent of the donation goes to the charity, the fundraiser can't say that "a substantial portion" will go toward the cause.

The company has also agreed not to misrepresent its location, and not to falsely claim that a donation will provide a benefit to the consumer's own community, region or state.

Full disclosure

"When someone calls Iowans claiming they're raising money for a worthy cause, I want them to know who is calling and where their donation is going.  If would-be donors ask, as they should, how much money actually goes to the charitable purpose, they should get an honest answer," Miller said.  "This consent judgment ensures that these solicitors will be straightforward about who they are, why they're calling and how donations are spent."

As part of this agreement, ACS denies wrongdoing or liability of any kind. However, Miller's office recorded two calls by ACS solicitors, raising money on behalf of an organization called "Vietnam Veterans of Iowa, Inc." Miller says the callers implied that they were calling from an Iowa location, rather than Michigan.  In both cases, ACS inadequately or outright failed to disclose that it is a professional fundraising company, Miller said.

In one call recorded in April of last year, a solicitor told a would-be donor that, "all the money stays local for the veterans here in Iowa."  According to Miller's lawsuit, 80 percent of a donation goes to ACS, the Michigan telemarketer.  The lawsuit also alleged that ACS arranged for a Des Moines-area mail-drop in order to obscure that Iowa donations are actually directed out-of-state.

Since 2008, Miller says at least five other states have alleged that ACS has failed to comply with their respective state consumer laws and regulations, or through the company's conduct or omissions engaged in misleading or deceptive practices.