FTC and 19 States Act to Cease a Misleading Cancer Charity Fundraising Scheme

The Federal Trade Commission, together with 22 companies from 19 states, stopped a misleading charity fundraising scheme and its operators who made false or misleading claims to U.S. donors.

Kars-R-Us.com, Inc. (Kars) and its operators, Michael Irwin and Lisa Frank, solicited charitable donations nationwide on behalf of United Breast Cancer Foundation, Inc. (UBCF), a charity that claims to help people affected by breast most cancers, in keeping with a grievance filed by the FTC and states. Kars claimed that car donations would permit UBCF to “save lives” by offering free and low-cost breast most cancers screenings. But, in actuality, solely $126,815 or 0.28% of the greater than $45 million that Kars raised was used to offer breast most cancers screenings, the grievance alleges.

Under a proposed settlement order reached with the FTC and its state companions, Kars and its operators face restrictions on future fundraising actions and Irwin, Kars’s President and co-owner till 2022, can be completely banned from fundraising.

“This case should send a strong message to fundraisers that the FTC will take action if they misrepresent the truth and exploit the kindness of generous donors for their own gain,” mentioned Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “We are grateful to our state partners for joining this effort to protect the public from fundraising schemes like this one.”

Kars solicited car donations by nationwide and native TV, radio and on-line adverts in English and Spanish, claiming the donations would permit UBCF to “save lives” by offering free and low-cost breast most cancers screenings. Kars tugged at donors’ heartstrings to maximise contributions with little regard for truthfulness or accuracy of the claims it made on behalf of UBCF, the grievance alleges. More than 84,000 well-intentioned folks donated their automobiles to Kars.
 

Between 2017 to 2022 Kars raised greater than $45.5 million on behalf of UBCF. The grievance alleges that $34.9 million of these raised funds went to pay Kars, its operators, and its distributors. Of the fraction of funds left to UBCF, most have been largely used for different functions, together with beneficiant compensation to UBCF’s CEO.

Kars, Irwin, and Frank knew or ought to have identified that the breast cancer-related claims they drafted and made on behalf of UBCF have been misleading or lacked substantiation, the grievance alleges.

The proposed settlement order imposes restrictions on Kars, Irwin, and Frank, together with:

• completely banning Irwin from fundraising or offering fundraising companies to any particular person, instantly or not directly. He can be prohibited from making misrepresentations in reference to the advertising and marketing or sale of any services or products;
• prohibiting Frank, Kars’s present president and sole proprietor, from making misrepresentations related to fundraising, or within the advertising and marketing or sale of another services or products;
• prohibiting Kars, its staff, and anybody actively working for or engaged with the corporate from making misrepresentations related to fundraising, or within the advertising and marketing or sale of another services or products; and
• requiring Kars and Frank to substantiate fundraising claims.

Irwin, Frank, and Kars additionally face a complete financial judgment of $3,882,091, which is partially suspended based mostly on their lack of ability to pay the complete quantity. If Kars, Frank, and Irwin are discovered to have lied to the FTC and state companions about their monetary standing, the complete judgment can be instantly payable.

The state companies becoming a member of the FTC on this case embrace the attorneys basic of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, New York, North Carolina, Oklahoma, Oregon, Utah, Virginia, West Virginia, and Wisconsin in addition to the secretaries of state of Maryland, North Carolina, and South Carolina; and the Utah Division of Consumer Protection.

The Commission vote authorizing the employees to file the grievance and stipulated last orders was 3-0. The FTC filed the grievance and last orders within the U.S. District Court for the Central District of California.

Consumers on the lookout for more information about how to donate safely and keep away from charity scams can discover it on the FTC’s web site.