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FTC comes down hard on charities that scam veterans and Armed Forces members

The agency is stepping up protections and increasing fines against deceitful actors

Photo (c) CatLane - Getty Images
The Federal Trade Commission (FTC) is lowering the boom on any charity that maliciously asserts that it’s raising money on behalf of servicemen and veterans.

Law enforcement and charity regulators from every state in the Union are partnering in the FTC’s crackdown. So far, those combined forces have taken more than 100 actions and established an online education resource called “Operation Donate with Honor” to help consumers understand how charity scams work.

“Americans are grateful for the sacrifices made by those who serve in the U.S. armed forces,” said FTC Chairman Joe Simons. “Sadly, some con artists prey on that gratitude, using lies and deception to line their own pockets. In the process, they harm not only well-meaning donors, but also the many legitimate charities that actually do great work on behalf of veterans and servicemembers.”

Preying on veterans and servicemembers

As an example, the Center for Public Integrity reported that retired Army Maj. Brian Arthur Hampton headed up three such organizations, one of which included the Center for American Homeless Veterans.

One of the telemarketers that Hampton allegedly used -- Outreach Calling -- kept a whopping $7.9 million of the $8.7 million it raised for Hampton’s “Circle of Friends for American Veterans” between 2011 and 2015.

In Florida, the state’s attorney general Pam Bondi was able to get a judgement against the sham veterans charity Help the Vets, Inc. and its founder, Neil Paulson, Sr. Help the Vets raised approximately $20 million between 2014 and 2017 with the promise that donations would assist vets with everything from medical care to suicide prevention. Bondi found that the money went to Paulson instead.

Paulson’s game ended when he signed a Stipulated Final Judgment and Permanent Injunction, in which Help the Vets relinquished its remaining assets and Paulson was banned for life from any kind of charity management. He also was required to fork over $1.75 million, nearly twice the amount Paulson personally received from Help the Vets.

“July is Military Consumer Protection Month and one way to protect our veterans and service members is to stop scammers who exploit military members in an effort to steal charitable donations,” said Bondi.

“It is reprehensible that anyone would prey on the good intentions of people trying to help our heroes and I will not let the immoral actions of a few bad actors taint the good work of our legitimate charities.”

Donor beware

The desire to support those who have fought for the U.S. can turn many consumers into easy targets. The FTC and state attorneys general can’t emphasize the importance of taking some time to check out any and all fundraising pitches.

Whether it’s online, telemarketing, direct mail, or someone that just shows up at your door, consumers are cautioned to tell the marketer that they’ll take it under consideration and get back to them.

Charity scams can run the gamut -- from misleading prize promotion solicitations to tax deductions. When disasters hit, scams are prone to rearing their ugly heads in hopes of turning sympathizers into suckers.

The FTC publishes updates on scams and warns consumers to not to let anyone rush them into making a donation. It also posts reminders to beware of scammers who try to trick consumers into paying them by thanking the consumer for a donation they never made.

Perhaps the most prevalent types of charity scams are carried out through an ever-increasing number of robocalls. In particular, the FTC warns consumers to be cautious about answering calls that look like they’re from a local area code, a new wrinkle scammers have started using. The agency continues to emphasize that all consumers should make sure they’re on the government's national Do Not Call registry.

How to validate a charity

In the case of the veterans and servicemembers scam, the FTC has produced a video that gives consumers some basic information on what to look out for.

The FTC also has a handy checklist that consumers can use to gauge the integrity of a charity before they write a check.

Other resources include Charity Watch where consumers can sniff out the validity of a charity and how much it actually gives to the intended programs it says it supports. Plus, almost every state has its own check-a-charity interface or, at minimum, updates on scams its attorney generals have uncovered.

"I'm glad that government regulators are shutting down some scam charities that have been ripping off donors for years. But we must remain vigilant; there are still far too many unethical or poorly performing charities still actively soliciting our dollars. This is particularly true with veterans and military charities," said CharityWatch President Daniel Borochoff in a statement to ConsumerAffairs. 

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