FTC Cracks Down on Deceptive Cancer Charity Fundraising, Issues Warning to Professional Fundraisers
WASHINGTON, D.C. – The Federal Trade Commission (FTC) recently reached a settlement with Kars-R-Us.com, Inc. (“Kars”), a professional fundraising company, highlighting the agency’s focus on clarity and accountability in charitable giving. The action serves as a stark warning to businesses engaged in fundraising activities: thorough due diligence and truthful representations to donors are critical.
The FTC alleged that kars collected millions of dollars between 2017 and 2022 through television, radio, and online advertisements in both English and Spanish, soliciting donations for the United Breast cancer Foundation (UBCF). Thes solicitations claimed proceeds would “save lives” by funding breast cancer screenings, but the FTC’s lawsuit revealed UBCF spent less than 1% of the $45 million raised by Kars on actual screenings.
This case underscores the legal responsibility of fundraisers to provide donors with clear and accurate details regarding how their contributions will be used. Fundraisers can be held liable for deceptive claims made during fundraising efforts.
to avoid potential legal issues and protect donors,the FTC recommends professional fundraisers take the following steps:
* Scrutinize Financial Records: Review the charity’s IRS Form 990 filings,financial statements,audits,written plans,and itemized budgets to understand income and fund allocation.
* Conduct Online Research: Investigate whether the charity has faced legal action from state regulators or received criticism for past donation practices.
* Assess Governance & Compliance: Verify the charity’s 501(c)(3) status with the IRS, state registration for solicitations, board independence (avoiding boards comprised solely of family members), a conflict-of-interest policy, and documented board meeting minutes.
* Demand Substantiation: Request concrete details about the charity’s programs and campaigns,and verify any claims made during fundraising – including beneficiary details and impact metrics – using resources like the BBB Wise Giving Alliance (give.org), charity Navigator (charitynavigator.org), CharityWatch (charitywatch.org), and GuideStar (guidestar.org).
The FTC provides additional guidance for businesses involved in online fundraising and reviewing charity requests at its website: https://www.ftc.gov/business-guidance/resources/online-charitable-giving-portals and https://www.ftc.gov/business-guidance/resources/tips-retailers-how-review-charity-requests.
Individuals who suspect fraudulent or deceptive fundraising practices are encouraged to report them to the FTC at ReportFraud.ftc.gov.
