FTC Busts $110m Charity Fraud Operation

The Federal Trade Commission (FTC) has joined forces with nearly 40 US states to crack a major charity fraud operation that scammed victims out of more than $110m.

The regulator teamed up with 46 agencies from 38 states and Washington DC, most of them state attorneys general, to shut down the work of Associated Community Services (ACS), sister companies Central Processing Services and Community Services Appeal, and two other fund-raising spin-offs run by ACS managers, Directele, and The Dale Corporation.

The operation was driven by illegal robocalls, which comprised most of the 1.3 billion deceptive fundraising calls that were used to elicit donations from 67 million consumers.

ACS and related defendants have agreed to settle charges by the FTC and state agencies that they tricked Americans into donating to organizations which spent next to nothing on the charitable causes they claimed to support.

The FTC claimed that, in some cases, defendants kept as much as 90 cents in every dollar that they received from their donors.

The operation had been ongoing since at least 2008, and used worthy causes such as homeless veterans, victims of house fires, breast cancer patients and children with autism to encourage victims into parting with their money.

ACS and Directele are accused of knowingly breaking an FTC regulation that prohibits robocalls to first-time donors, and automated calls to prior donors made without an opt-out.

ACS is also accused of harassing potential donors. It called more than 1.3 million phone numbers over 10 times each in a single week and 7.8 million numbers more than twice in an hour. Over 500 phone numbers were called 5000 times or more, according to the FTC.

Although ACS stopped operating in 2019, having previously been the subject of 20 law enforcement actions, two defendants are said to have continued their deceptive practices with Directele and The Dale Corporation.

Many of the “monetary judgements” made by the FTC are suspended due to an “inability to pay” on the part of the defendants. However, proceeds from the sale of a holiday home and a ski boat will be turned over to the authorities, as will a total of around $500,000.

“Deceptive fundraising can be big business for scammers, especially when they use illegal robocalls,” said Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection. “The FTC and our state partners are prepared to hold fraudsters accountable when they target generous consumers with lies.”