Nevada Attorney General Aaron D. Ford has joined with the Federal Trade Commission and dozens of other agencies across 38 states in an operation to shut down a massive telefunding operation that netted millions of dollars for fraudulent fundraising campaigns, mostly through illegal robocalls.
According to a statement from Ford’s office, “Associated Community Services (ACS) and a number of related defendants have agreed to settle charges by the FTC and state agencies that they duped generous Americans into donating to charities that failed to provide the services they promised.”
Those defendants collected more than $110 million through the deceptive solicitations, which claimed to support veterans, children and firefighters. In all, 67 million consumers were hit with 1.3 billion deceptive phone calls.
“These illegal robocalls not only posed an annoyance to consumers, but also tricked Nevadans into giving their money over to what they thought was a charitable organization,” said Ford. “My office is committed to shutting down these types of fraudulent robocallers who prey on our residents for good.”
The complaint
ACS, its sister companies Central Processing Services and Community Services Appeal, several spin-off companies and eight owners and managers were named in the complaint, which alleges violations of the Nevada Deceptive Trade Practices Act, the FTC Act of 1914, the Telemarketing Sales Rule and numerous other state and federal laws. The companies’ activities go back at least to 2008.
“The defendants, with knowledge and failing to disclose, kept as much as 90 cents of every dollar they solicited from generous donors on behalf of the charities,” the attorney general’s office said in a statement. In some cases, the charities received as little as one-tenth of one percent of funds raised.
The attorney general’s office also noted that ACS was the major fundraiser for the sham Cancer Fund charities that were shut down by the FTC and states in 2015.
In addition to the fraudulent fundraising, the companies also violated the Telemarketing Sales Rule by using pre-recorded messages in calls to first-time donors, which isn’t allowed. The rule allows for pre-recorded calls only to prior donors, and the recording must tell the call recipient of their ability to opt out of future calls and provide a mechanism to do so.
Harassing calls were also noted in the complaint.
“ACS called more than 1.3 million phone numbers more than 10 times in a single week and 7.8 million numbers more than twice in an hour. More than 500 phone numbers were even called 5,000 times or more,” said Ford’s office.
The settlement with the defendants bars them from a variety of activities, including fundraising or consulting activities for charities, telemarketing, using robocalls of any form or using abusive calling practices. Two of the spin-off companies—Directele Inc. and The Dale Corporation—must cease operations and dissolve.
What funds are recovered will be contributed to legitimate charities that support causes similar to those for which the original donations were made, but that may not be much. Some of the monetary judgments against the defendants were fully or partially suspended due to inability to pay, said Ford’s office.
Scammer whack-a-mole
Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, which was involved in the operation, said deceptive charitable fundraising, especially when robocalls are used, can be a big business for scammers. USA Today reported last month that over the past year 75% of Americans said they’d been targeted by phone scammers.
Last year, the FTC reported that data from the Do Not Call Registry showed a 68% drop in robocall complaints from April 2019 to April 2020, adding that reported robocalls for April and May 2020 were the lowest the agency has seen in years. The illegal calls that were made relied much more on recorded messages than live callers as well, likely due to pandemic related stay-at-home orders. (Apparently, even phone scammers follow those government orders.)
While the pandemic reduced the number of scam phone calls, at least temporarily, it opened up new opportunities for scammers.
Provision Living, a retirement community company, surveyed Americans in March and April 2020 about the frequency and types of robocalls they’d been receiving. Nearly a quarter of respondents said they’d been getting more robocalls and robotexts since the pandemic started, and about 20% said they’d received a robocall related to COVID-19. The topics of the calls varied, from promoting COVID-19 treatments, free testing or low-price health insurance to offering financial relief or asking for donations. About 15% of those surveyed said they’d received a call about their stimulus check.
Who are these robocallers posing as? The Social Security Administration and the IRS top the list, with about 40% of respondents saying they’d received a call from a scammer posing as either agency. KNPR reported on one scam where callers posed as COVID-19 contact tracers to try and get credit card or bank account information from victims.
The FTC, already seeing an uptick in COVID-19-related robocalls, on March 27, 2020 issued a warning about scammers trying to profit off of coronavirus-related fears. It also set up a page online, ftc.gov/coronavirus, to keep consumers up to date on the latest COVID-19 scam tactics.
The FTC has more information for consumers about charitable giving as well. Visit https://ftc.gov/charity for tips on how to spot sham charities.
Complaints about charity fraud, robocalls and other consumer issues can be reported to either the FTC at https://reportfraud.ftc.gov or to the Office of the Nevada Attorney General at ag.nv.gov.
Source: A portion of this story was sourced from the Office of the Nevada Attorney General
