Ending Charity Fraud, Misrepresentation, and Bad Practices

| Contact Center/CRM Views and Analysis

Ending Charity Fraud, Misrepresentation, and Bad Practices

As Americans set out for the Memorial Day weekend I wonder how many realize that this is in a reality a somber holiday, originally started to honor the Union soldiers who died in the Civil War that greatest of American tragedies, whose political aftershocks continue to this present day, and expanded (rightfully) to all fallen American service personnel. When I was a Cub Scout I took part in the local Memorial Day parade, marching to my town's largest cemetery where an honor guard fired a 21-gun salute with their rifles, and racing with the other boys to pick up the shell casings.

Unfortunately as with all human endeavors there are the vermin who seek to exploit and abuse the respect that we have for those who fight for our freedom by seeking funds for bogus veterans' organizations via telemarketing. The Federal Trade Commission has caught a few in its traps. The FTC, joined by 48 states, brought 76 enforcement actions against 32 fundraising companies, 22 non-profits or purported to be ones on whose behalf fund were solicited, and 31 individuals in "Operation False Charity". These include two FTC actions against alleged sham non-profits and the telemarketers who made deceptive claims about these so-called charities--including supposedly for veterans. The FTC alleged that three sham non-profit organizations, American Veterans Relief Foundation, Inc. (AVRF), Coalition of Police and Sheriffs, Inc. (COPS), and Disabled Firefighters Fund (DFF) "were created almost entirely to provide profits for the individual defendants and the for-profit fundraisers they hired."

The FTC contends that solicitors calling on behalf of AVRF falsely claimed that the money they were raising would support the families of soldiers fighting overseas through a program it called "Operation Home Front." In fact, AVRF spent virtually no money assisting military families. AVRF's bogus "Operation Home Front" is not connected to the genuine non-profit Operation Homefront, Inc., a national organization with 30 chapters across the country that provides real support to the families of troops and gets high ratings from watchdog groups.

If there is a hereafter there should be a special nasty place for companies who manipulate individuals' instincts to give and help, not just for veterans and in this instance but for all worthy causes whose would-be donors are victims of deliberate misrepresentation. Barring that the authorities should go further by having them arrested, charge them with fraud and if pled or found guilty sentence them to the vilest community service assignments there are: like picking garbage and cleaning cesspools, septic tanks, stables and zoo pens in 100-degree heat while wearing the finest cold-rolled steel 'jewelry'. Or if criminal prosecutions are not feasible, giving the defendants the 'option' of paying the penalty by such 'barter' and strongly encouraging them to take it.

Yet what is more disturbing, yet more commonplace unfortunately are the misrepresentations made by telemarketers calling on behalf of legitimate organizations, to try and boost their incomes and what the public consensus appears to be a too-low take (15 percent) by charities. One of news stories about CDG closing down several of its contact centers also includes mention of action by the FTC against it. To cite the South Florida Business Journal: "The company's tactics have come under scrutiny from the Federal Trade Commission and others who allege CDG exaggerates the amount of donations that go toward charitable causes."

In defense of CDG and other teleservices firms charities point out that while these companies do extract most of the money raised from donors--up to 85 percent--what they have left over is more than what they had before.

Chuck Hurley, chief executive of Mothers Against Drunk Driving told the Long Island Business News, in a story published Oct.10, 2008, that MADD national tried more 'down-home methods of fundraising', but they failed. MADD national in 2005 lost money on golf tournaments, made a mere $585 after expenses on walking, running and biking events and earned only $326 on dinners and luncheons.

"'If you think it's easy to raise money for a nonprofit organization, even one as important as MADD, you're new to this,'" said Hurley.

Charities run the risk in today's environment of losing credibility with the average donor, who contributes via telemarketing, and in being restricted in their efforts by further legislation to curb fraud and misrepresentation, such as removing their exemption from Do Not Call lists. In response there needs to be reform of charity fundraising via telemarketing, ideally a combination of stiff penalties including aggressive criminal prosecution to reflect the vileness of the fraud when it takes place, find ways to remove the temptation of misrepresentation, and a review of practices and costs to increase returns to worthy organizations.

To make such meaningful actions happen organizations like the American Teleservices Association, the Direct Marketing Association, and the Canadian Marketing Association and the charities need to step up to the (collection) plate to come up with best practices that can become codes and practices and standards that in turn form the basis of laws. They also have the collective clout to make this happen.

By making worthy causes more worthy to donate, more people, such as our veterans, can get the help they need, which is the least we can do for those who have and continue to serve us, and in doing so making our world a better place.

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