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August 13, 2010

Attorney General Accuses Michigan Professional Fundraiser of Violating Consumer Fraud Act

(DES MOINES, Iowa) Attorney General Tom Miller today accused a Michigan fundraiser of violating Iowa’s Consumer Fraud Act.
Associated Community Services (ACS), based in Southfield, Michigan, solicited Iowans on behalf of an organization called “Vietnam Veterans of Iowa, Inc.”

In two phone calls recorded by the Iowa Attorney General’s Consumer Protection Division, representatives of ACS implied that they were calling from an Iowa location, rather than Michigan. In both cases, ACS inadequately or outright failed to disclose that it is a professional fundraising company.

“We allege this professional fundraiser simply wasn’t being straight with Iowans,” said Miller. “Our recorded phone calls reveal that the company was not up front about who was calling, and exactly where Iowans’ donations were going.”

In one call recorded in April of this year, a solicitor told a would-be donor that, “All the money stays local for the veterans here in Iowa.” According to Miller’s lawsuit, 80 percent of a donation goes to ACS. The lawsuit also alleges that ACS arranged for a Des Moines-area mail-drop to obscure that Iowa donations are actually directed out-of-state.

Since 2008, at least five other states have alleged that ACS has failed to comply with their respective state consumer laws and regulations, or through the company’s conduct or omissions engaged in misleading or deceptive practices.

“This company has had numerous run-ins with law enforcement and should know the law,” Miller said. “We assert that ACS is providing financial incentives to its solicitors who, in turn, deceive Iowans to collect a quick buck. And only a fraction of each donated dollar is making it to those who need it.”

In the petition filed Friday in Polk County District Court, Miller’s office seeks an injunction prohibiting future violations, a $40,000 civil penalty for each violation of the Consumer Fraud Act, and an additional $5,000 for each violation of the Consumer Fraud Act committed against an older person. The petition alleges that older Iowans are disproportionately represented among the recipients of ACS’s solicitations.

Miller adds that there are many legitimate solicitors seeking money for veterans’ groups and other worthy causes, though often it can be difficult to discern legitimate solicitors from fraudulent fundraisers. “I hope cases like this don’t stop Iowans from giving,” Miller said, “I simply want Iowans to be smart about giving.”

Last month when Miller announced three actions against three separate professional fundraisers, he renewed his call for a Charitable Solicitations Act. Miller’s proposal would require charitable organizations to disclose their income, which would give Iowans a new tool to give wisely. The proposal would also require charitable organizations to disclose the percentages of income they use for charitable purposes, as opposed to other costs such as administration and fundraising.

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