Consumer Law

Scam Alert: Charitable Donations

You've seen them before. The glass jar at the checkout counter. The sign atop a stack of stuffed animals and dolls. The poster announcing a benefit for an accident victim. "PLEASE GIVE! PART OF ALL PROCEEDS GO TO... [fill in the blank]." But what portion? And what exactly are "the proceeds"? These are questions shoppers thought about after the fact, after being duped into buying toys that had been falsely touted as benefitting worthy causes.

Monitor Your Giving

A recent news story about an Internet-only retail Web site that marketed a "Caylee doll" and a "Michael Vick dog chew toy" gave us pause. The seller proclaimed on its Web site that proceeds would go to charities. For the doll, proceeds were to go to the National Center for Missing and Exploited Children. For the dog toy, to local animal shelters. The seller steadfastly defended the sales of these two items.

Even though the seller claimed that he had donated $5,000 to that National Center, only $10.00 was confirmed. Hundreds of consumers complained about the offensiveness of the sale items. An attorney for Caylee's family finally called the seller who at last stopped the sale of the doll. The Florida Attorney General's Office put a halt to the sale of the dog toy by filing suit.

Before that, however, thousands of well-meaning consumers like you had purchased the toys, thinking that they were giving generously to a worthy cause. In the end, only the seller benefitted, and the consumers found themselves rewriting the charitable donations tally for their tax returns.

Compensation for Consumers Will Be Minimal

Fortunately, in both of these cases the wrongdoer was identified and stopped from further exploiting the two tragedies. The high profile nature of the two incidents likely gave the attorneys who intervened more clout to get the wrongdoer to cease the sales.

Naming and finding the wrongdoer isn't an easy task, especially if you suspect no deception. Even if those two goals are accomplished, it can still be a long and arduous road to actually collect money back. If you have purchased just one or two items for a nominal price you may not find it worthwhile to sue the seller.

However, you should still be willing to help others avoid this kind of fraud by reporting any suspicious "charitable" sales to the Better Business Bureau, the Attorney General's office or local law enforcement officials. If you have spent a significant amount of money, it may be worthwhile to talk with an attorney for advice on possibly suing the seller.

Charities Need Permission to Use Name or Photo

Some people are genuinely interested in organizing fundraiser benefits or gathering donations to help a worthwhile cause. While such efforts are laudable, it will be important to follow common sense precautions early in the planning stage. For example, the parents or guardians of a minor, or the nearest relatives of an adult, should be consulted and their written permission obtained before using the person's name and photograph in publicizing the event or collections.

Good bookkeeping will also be important to ensure that organizers (and volunteers) aren't misusing or misappropriating the donations. State or local regulations may require a permit before collecting money for an event, especially if raffle tickets are sold.

Even if fund-raising is planned for a regional or national organization, its written permission should be obtained before planning is complete. The unauthorized use of an individual's or organization's name or likeness could lead to a lawsuit for libel, defamation, misappropriation of trademark or copyright or fraud. It isn't wise to tack on a well known charity's name to an event or advertising in the hope that it will draw more donations. An attorney can draft the appropriate permission and consent forms to memorialize the entity's or individual's written consent to the use of their name and photo and to the type and nature of the event or collection.

Many states have laws designed to protect against the misleading of consumers as to the true nature of a charitable endeavor. These might include a Consumer Fraud Act and a Deceptive Business Practices Act in your state . Of course, federal and state criminal statutes also punish theft, so that the accountability of volunteers and organizers is very important.

Finally, the "real" organizations are regularly audited and have to file with local business authorities or a national organization, which should be checked if there are questions.

Questions for Your Attorney

  • I made a sizeable donation to a charity, and later found out that I was scammed. How does this affect my taxes if I claimed deductions for charitable donations?
  • Have there been ever been lawsuits against the organizers of fraudulent charity fundraisers, or are those who contributed just out of luck?
  • I contributed to a fraudulent charity; I know I'm out for the money I donated. However, does our State Attorney General ever take criminal action against such scam organizers?
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