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WBK Industry News - Federal Regulatory Developments

FTC Agrees to Settlement with Charities over Federal Trade Commission Act and FTC Telemarketing Sales Rule Violations

On March 28, 2019, the FTC announced it had agreed to two settlement agreements with two charities and their operators for alleged violations to the Federal Trade Commission Act and the FTC’s Telemarketing Sales Rule.  One of the settlements was agreed to jointly with the state of Missouri while the other was agreed to jointly with the state of Florida.

The first charity and its operator are alleged to have asked for donations that would help families of police officers killed in the line of duty.  However, the FTC claimed almost none of those funds were spent on helping the families or assisting disabled officers.  This charity and its operator were also charged with violating the Missouri Merchandising Practices Act.

The second charity and its operator are alleged to have deceptively claimed donations would be used for, among other things, care packages for deployed service members, immediate assistance for veterans facing homelessness, and counseling.  The FTC in this case also claimed that in reality most of the contributions went to other funds besides the funds described to donors.  This charity and its operator were also charged with violating the Florida Deceptive and Unfair Trade Practices Act and the Florida Solicitation of Contributions Act.

As part of the settlement agreement the operators of both charities are banned from engaging in charitable solicitations or otherwise working for charities.  Additionally, monetary judgments of approximately $9.9 million and $6.5 million were entered against the first and second charities and their operators respectively. In the settlement of the first charity, all but $100,000 will be suspended, while in the case of the second charity, all but $105,000 will be suspended.  Both suspensions are based on the defendant’s sworn financial statements and related documents demonstrating their inability to pay.