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March 31, 2011

Michigan Professional Fundraiser Ordered to Change Telephone Soliciting Practices

(DES MOINES, Iowa)  A Michigan-based professional fundraiser accused of violating Iowa’s Consumer Fraud Act has agreed to change its marketing practices, comply with Iowa’s consumer fraud laws, and will pay $35,000 to the state’s consumer fraud enforcement fund as part of a settlement with the Attorney General’s Consumer Protection Division.

Associated Community Services (ACS), of Southfield, Michigan, solicited donations from Iowans on behalf of various organizations.

As part of the consent judgment filed Thursday in Polk County District Court, ACS agreed to refrain from stating or implying that its paid telephone solicitors are members of, employees of, or are volunteers for the charitable organization for which it is soliciting funds.  ACS must clearly state that it is a professional fundraiser, and ACS agrees to refrain from making false representations, including:

  • Stating or implying that a substantial portion of a donation will go to the charitable organization, if in fact less than 50 percent of donated funds go to such entity or other purpose for which funds are solicited;
  • Misrepresenting ACS’s location;
  • Falsely claiming that a donation will provide a benefit to the consumer’s own community, region or state.


ACS also agrees to record and preserve some of its phone solicitations to Iowans, train its employees on complying with Iowa’s Consumer Fraud Act and this agreement, and ensure that employee bonuses based on donations generated are contingent on compliance with this agreement and Iowa law.  As part of this agreement, ACS denies wrongdoing or liability of any kind.

“When someone calls Iowans claiming they’re raising money for a worthy cause, I want them to know who is calling and where their donation is going.  If would-be donors ask, as they should, how much money actually goes to the charitable purpose, they should get an honest answer,” Miller said.  “This consent judgment ensures that these solicitors will be straightforward about who they are, why they’re calling and how donations are spent.”

Prior to August 13, 2010 when Miller filed the Iowa Consumer Fraud Act petition, in two phone calls recorded by the Iowa Attorney General’s Consumer Protection Division, representatives of ACS, soliciting Iowans on behalf of an organization called “Vietnam Veterans of Iowa, Inc.,” 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.

In one call recorded in April of last 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 Michigan telemarketer.  The lawsuit also alleged that ACS arranged for a Des Moines-area mail-drop in order 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.

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