News & Views - 03/26/98

Thursday, March 26, 1998

BADGE FRAUD BAGGED

Last week, the Federal Trade Commission announced that Civic Development Group and its owners had settled charges filed against them. CDG is a professional telefundraiser - a company that calls consumers on behalf of non-profits to ask for donations. The defendants allegedly misrepresented to consumers that donations to the American Deputy Sheriff's Association would buy bullet-proof vests, provide death benefits for survivors of deceased officers, and otherwise benefit their local police. According to the FTC, virtually none of the money raised by CDG went to the donor's local or state law enforcement agencies.

To settle the charges, CDG has agreed to not misrepresent how donations have been or will be used.. It will also record and review at least 1,000 calls a month to make sure that its employees aren't lying. If any employee makes more than one misrepresentation to a consumer during any 12 month period, that employee will be fired.

For more information about the settlement, check out the FTC's press release.

Be smart. If a fundraiser calls asking for donations to support your local police or fire department, don't automatically assume the money will help your local community.

Ask for the information to be sent to you in writing. Most charities will have no problem sending you information.
Never give out your checking account number or credit card number to anyone you don't know soliciting over the phone. Ask for an address and offer to send a check.
Ask how much of your donation is going to the charity. Even if a professional fundraiser is truly soliciting for your local police department, it may be keeping most of the donations as fees. It's often better to directly to support charities and public services in your area.
Check with your local authorities. If the organization claims that it provides benefits or provides equipment for a local agency, call. For example, if you are asked to donate money to help support the survivors of firefighters killed in action, call your local fire department's non-emergency number and ask if it receives money from the charity for that purpose
Make sure the charity and the professional fundraiser are registered. Check with your State Department of Justice/Attorney General's Office Charities Division. If a they aren't unregistered, they can't legally ask you for money.
Recognize false claims of tax-deductability. Make sure the charity has tax-exempt status from the IRS. False claims of tax-exempt status or registration are warning signs of fraud. Remember, taking a deduction from your taxes for a donation that wasn't tax-exempt could get you audited.
Check with the National Charities Information Bureau or the BBB Philanthropic Advisory Service to make sure that the charity is abiding by certain ethical and financial standards.
For more advice on how to avoid charity fraud, check out our tips on Charitable Solicitations and the FTC's brochure on charitable donations.
If you have any questions or would like to report an incident, call NCL's National Fraud Information Center at 1-800-876-7060 or use one of our online forms.
NOTE: The stipulated final judgment is for settlement purposes and does not constitute an admission by the defendant of a law violation. The judgments have the force of law when signed by the judge.

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