Schuette Secures Justice for Seniors in $45,000 Cash Settlement with Southfield Telemarketing Firm

Contact: Joy Yearout 517-373-8060

February 26, 2014

          LANSING - Attorney General Bill Schuette today announced a $45,000 settlement with professional fundraiser Associated Community Services (ACS), of Southfield, to resolve complaints that it wrongly used the Attorney General Office's name to convince senior citizens to contribute credit card information via fundraising calls.  Schuette threatened a civil action against the firm encompassing each of ACS's alleged violations of state charitable trust law and ACS agreed to settle with a significant cash payment in lieu of legal action.

 "Any telemarketer that tries to trick our Greatest Generation with deceptive tactics must face the consequences," said Schuette.  "Michigan law requires honesty of our professional fundraisers.  We will not tolerate those that abuse the name of this office to deceive donors."

ACS Background

Schuette's Charitable Trust Section licenses professional fundraisers that solicit in Michigan.  The Charitable Trust Section received a complaint against ACS in January 2013 from a former ACS employee, who alleged that ACS was using a telemarketing script that included a misleading credit card script.  In the script, if a donor said he or she didn't want to donate by credit card over the phone, the ACS telemarketer was to respond: "for that very reason, we are on file with the State Attorney General's Office. . ." [emphasis in original]. 

This rebuttal misled donors into thinking that, if ACS was on file with the Attorney General, then ACS could be trusted with the donors' credit card information.  However, the fact that ACS is "on file with the Department of Attorney General" says nothing about its ability to protect credit card information; instead, it simply means that ACS is licensed to fundraise on behalf of charities in Michigan.  Because ACS's credit card script implied otherwise, Schuette alleged it was misleading and violated Michigan law.

The Attorney General's Charitable Trust Section requested a sample of ACS's call recordings during its investigation of the complaint.  The Charitable Trust Section discovered fourteen calls in which ACS appeared to be using the misleading credit card rebuttal.  In each of these calls, the donor, who often sounded elderly, hesitated about paying by credit card over the phone. The ACS telemarketer then responded by referencing ACS's licensing with the Attorney General's Office.  Then, the caller agreed to pay by credit card.

Click here to download recordings of the calls: http://bit.ly/1EDpghs

In May 2013, Schuette issued a Cease and Desist Order, which included a Notice of Intended Action (NIA) describing ACS's 230 alleged violations.  Each of the 14 calls included two violations, and Schuette alleged ACS was responsible for approximately 200 additional violations (see paragraph 17 of Notice of Intended Action).   The recordings in question involve solicitations on behalf of four charities: Foundation for American Veterans, Vietnam Veterans of Michigan, Breast Cancer Society, and Cancer Fund of America.  The charities are not accused of any wrongdoing in connection with the unlawful solicitations.

ACS was alleged to have violated the Charitable Organizations and Solicitations Act in the following ways:

·      Failure to provide copies of all soliciting materials upon request of the Attorney General. Although ACS provided telemarketing scripts, including some credit card rebuttals, ACS failed to provide the rebuttal that referenced the Attorney General's office.

·      Submitting a document to the Attorney General that contains a materially false statement.  In its written response to the Attorney General, ACS stated that any reference to the Attorney General's Office was intended to comply with disclosure requirements and to answer any questions about how a person can verify registration with that office.  But Michigan's Solicitation Act does not have such a disclosure requirement, and the call recordings reveal that ACS did not reference the name of the Attorney General's Office in response to any questions regarding registration verification.  ACS's statement was false.

·      Misleading a donor to believe the Attorney General's office has approved or endorses ACS's credit card payment system.

If a donor did not want to provide his or her credit card information over the telephone, an ACS rebuttal said:

"I truly understand (customer's name) because I would be concerned also! But for that very reason, we are on file with the State Attorney General's Office. And we also use an encrypted system." [emphasis in original]

·      Employing a device or scheme to obtain money from a person by means of a false, deceptive, or misleading pretense or representation.

There are 14 call recordings submitted by ACS that included one or more violations in each call.  

 Securing Justice for Seniors through $45,000 ACS Settlement

 In response to the May 2013 NIA, ACS ceased using the misleading credit card rebuttal and submitted a written response denying wrongdoing. However, through months of negotiation, Schuette negotiated a $45,000 settlement with ACS and they must revise their disputed script for future solicitations. $45,000 settlement is consistent with ACS's recent settlements with other states.

Schuette reminds donors to be cautious with their charitable dollars before giving.  To help donors give wisely, Schuette established a searchable database for charities in 2011.  The database allows donors to see how much of their donations actually reach their charitable purposes.  See: www.michigan.gov/agcharitysearch

In April 2013, Schuette published the Attorney General's first annual professional fundraising report-available at: www.michigan.gov/agcharities.  In the report, donors can see how much of their donation is kept by professional fundraisers like Associated Community Services, and how much the charity actually receives.

Donors can help the Attorney General combat false or misleading charitable solicitations by reporting these acts to the Charitable Trust Section at (517) 373-1152 or ct_email@michigan.gov.  Complaints may also be mailed to:

Charitable Trust Section

P.O. Box 30214

Lansing, MI 48909

 

 

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