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David N. Kirkman
Task Force Alert
Chair
Asst Attorney General
Consumer Protection
NC Department of
Justice
P.O. Box 629
Raleigh, NC 27602
919-716-6000

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North Carolina Division of Aging and Adult Services

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Feds Claim Fund-Raisers Mislead U.S. Consumers

The Federal Trade Commission today announced the filing of a civil complaint in Federal Court seeking civil penalties and injunctions against a New Jersey-based telemarketer. The complaint alleges the company made misrepresentations to consumers when fund-raising for police, firefighter, and other non-profit organizations, in violation of a 1998 stipulated court order and the main federal regulation governing telephone solicitations, the Telemarketing Sales Rule. The action was filed by the U.S. Justice Department and names Civic Development Group, LLC and two corporate officers, according to the Commission’s announcement. The announcement, which can be viewed in its entirety at www.ftc.gov/opa/2007/09/njfundraiser.shtm , contains the following paragraph:

The complaint specifically alleges that, beginning in about 2004, the defendants began changing their contracts with the charities to identify CDG as the charities’ “professional management consultant” (PMC) – instead of their professional fund-raiser, in an attempt to evade the Commission order. Under these PMC contracts, although defendants continue to operate as professional fund-raisers for the charities, they misrepresent to consumers that: 1) no professional fund-raising company or middleman is involved in the fund-raising campaign that would reduce the value of a consumer’s donation to the charity; 2) the telephone solicitor calling for the donation works for the charity; 3) the donation goes directly to the charity; 4) the charity receives 100% of the donation; 5) the charity directs how the entire donation is spent; and 6) a substantial portion of the donation goes to fund the charity’s programs. In fact, according to the complaint, on average no more than 15 percent of the consumer’s donation goes to the charity.

The Commission’s complaint also can be found at the website listed above. It contains only the allegations of the Commission, which the defendants are entitled to contest. They do not constitute findings by the court.

******End of Alert******

Date: September 27, 2007

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