State cracks down on charity telemarketing fraud

A telemarketing firm that authorities say deceived Hawaii residents into giving money it claimed would benefit veterans and firefighters, Community Support Inc., has been sued by the State of Hawaii in Circuit Court in Honolulu as part of "Operation False Charity," a federal and 48-state crackdown on charity fraud.

On May 20, Hawaii and 35 other states settled with the company, which agreed to stop its deceptive and illegal activities and pay $10,000 for any future violation. This was one of 76 actions taken against 32 fundraising companies, 22 nonprofits and 31 individuals nationwide announced by the Federal Trade Commission, which also released new guidelines to help consumers avoid charity fraud.

“In general, CSI kept no less than 83 percent of all money it collected on behalf of the charities,” said Deputy Attorney General Hugh Jones, who filed the lawsuit on May 19. “In many contracts CSI kept 90 percent of the money, leaving only 10 percent for the charity,” he said.  

The suit alleged that CSI had a pattern of consistently violating Hawaii laws over many years, that it often misrepresented how much of the funds actually go to the charity and how would be spent in the call recipient’s local community, it harassed call recipients, its callers falsely claimed to be law enforcement or veterans or that individuals had already made pledges or had made donations previously when they had not.  

The firm told residents 100 percent of their donations would go to charitable programs, and the money would be used in Hawaii. Actually, 85 percent to 90 percent of the money collected went to the fundraisers and none supported charities in Hawaii, according to the suit. Financial reports filed this year show that the company raised close to $100,000 in Hawaii.

“CSI has agreed to regularly report information to the states and be more responsible for its employees’ training, conduct and representations made to consumers,” Jones said.  “CSI has also agreed to reimburse the states $200,000 for the costs of the investigation.” Hawaii will get $7,000.

Hawaii materials relating to Operation False Charity, including an undercover tape recording of a solicitation call, may be found on the Attorney General's Charity Resources website.

Guidelines to avoid charity fraud

The Hawaii Attorney General’s Office in May issued these guidelines to help local residents avoid being ripped off by fraudulent fundraisers and to insure that their donations go to nonprofits and programs that provide real community service. If someone asks for a donation, take your time and get to know the charity:

• Ask for the charity's name, address, and phone number, and written information about its programs.
• Ask whether the person contacting you is a professional fundraiser and how much of your contribution will go to fundraising costs.
• Check the charity's track record by visiting Hawaii's online charity registry at http://ag.ehawaii.gov/charity.
• Beware of warning signs of a scam such as high-pressure pitches and requests for cash.
• Be skeptical when you are thanked for a pledge you don't remember making. Scam artists will lie to get your money.
• Beware of charities that spring up overnight.
• Call the Hawaii Attorney General's office at (808) 586-1470 if you are solicited by a charity that is not registered in the state.