FTC Penalizes Telemarketer for Deceptive Charitable Solicitation Calls

The Federal Trade Commission recently announced that an Ohio-based company that allegedly made millions of calls to consumers nationwide on behalf of charitable organizations has agreed to pay a $250,000 civil penalty to settle FTC charges that its telemarketers deceived consumers by falsely stating that they were not calling to solicit contributions.

The proposed order settling the charges, filed by the Department of Justice on the FTC’s behalf, also bars the defendant from violating the FTC’s Telemarketing Sales Rule, which requires telemarketers calling on behalf of a charity to promptly disclose the charity that they are calling on behalf of and that the purpose of the call is to seek a donation.

According to the agency complaint, since at least 2013, the defendant conducted hundreds of telemarketing campaigns to consumers nationwide on behalf of charitable organizations. In some of those campaigns, the FTC charges, the defendant’s telemarketers called consumers and told them at the start of the call that they were not calling to ask for a donation.

However, according to the FTC, the telemarketers subsequently asked consumers to mail or hand-deliver materials requesting donations to family members, friends or neighbors.

In addition, the FTC alleges that in many cases, despite initially saying they were not calling to solicit donations, the defendant’s telemarketers allegedly asked consumers to donate money, typically in amounts ranging from $10 to $50. Based on this conduct, the complaint charges the defendant with making false or misleading statements to induce consumers to make a charitable contribution, in violation of the TSR.

The proposed order settling the FTC’s charges bars the defendant, in connection with its telemarketing activities, from making any false or misleading statements designed to induce anyone to pay for goods or services or make a charitable contribution.

The order also requires the defendant, when making outbound telemarketing calls to induce a charitable contribution, to truthfully disclose: (i) the name of the charity on whose behalf it is making the call; (ii) that the purpose of the call is to solicit a charitable contribution; and (iii) whether the contribution sought is a donation, monetary gift or anything else of value.

The order also bars the defendant from violating the TSR in the future.

The order imposes a $250,000 civil penalty against the defendant and includes relatively standard recordkeeping and monitoring provisions to ensure compliance with its terms.

Contact the author if you are interested in implementing preventative advertising compliance measures, or if you are the subject of a state or federal investigation or enforcement action.  You can also follow him on LinkedIn or Twitter.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

 


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