Two leading U.S. Sentaors have called on federal regulators to investigate claims that well-known charity organizations are employing the use of telemarketing firms to encourage donations.
According to a Bloomberg.com report this week, Senators Richard Blumenthal and Herb Kohl have requested the Federal Trade Commission to investigate claims that major U.S. charitable organizations are using telemarketing companies to boost donations. Catching the lawmakers’ eyes is the fact that in many of these cases, the company doing the telemarketing is taking a large portion of the money a person may donate because of their call.
Blumenthal’s letter received by the FTC on Nov. 30 states, ” telemarketers acting on behalf of well-respected charities are deploying deceptive tactics to induce individuals to donate money that is kept mostly, and sometimes entirely, by the telemarketer.”
Further, Iowa Sen. Charles Grassley contends that the deceitful practices are sometimes illegal and that non-profit groups across the country are abusing their tax-exempt status through this telemarketing practice.
This development comes after Bloomberg recently published a report showing that one company in particular, InfoCision Management Corp, had misled the public from whom it pitched for donations saying that 70 percent of the money it collected on behalf of the charities they were working for went directly to that charity.
InfoCision Management Corp. has done work on behalf of some of the most well-known American charitable organizations, including American Cancer Society and American Diabetes Association. And it’s not just the telemarketing company that is subject to this proposed increased scrutiny. The report indicates that both major charities approved scripts that InfoCision employees were directed to read to the prospective donors. This script was what misled the would-donors into thinking that most of the money would be directed to the charity.
The American Cancer Society’s recent Notes to Neighbors campaign was one of the latest that used telemarketing to drive donations. Although the telemarketers were directed to say that 70 percent of the donations they collected were going directly to the charity, in reality, the Cancer Society would only received 40 percent of that amount.
The inquisitive Senators believe these sales tactics may be in direct violation of the federal Telemarketing and Consumer Fraud and Abuse Prevention Act.
The Diabetes Association told Bloomberg it plans to comply with the FTC investigation and that it wanted to “clarify” these business practices for regulators and the lawmakers. The FTC did not comment for the Bloomberg report on the most recent developments.