O Friday, Attorney General Anthony G. Brown and Secretary of State Susan C. Lee announced that Maryland, along with 21 other state agencies and the Federal Trade Commission, has stopped a deceptive charity fundraising scheme run by Kars-R-Us, Inc. and its operators. According to the complaint, the group raised more than $45 million on behalf of the United Breast Cancer Foundation but used less than 1% for screenings, leading to a settlement that bans certain fundraising activities and imposes financial penalties on those involved.
Attorney General Anthony G. Brown and Secretary of State Susan C. Lee, today announced that 22 state agencies from 19 states, including Maryland, and the Federal Trade Commission (FTC) have stopped a deceptive charity fundraising scheme and its operators who made false or deceptive claims to donors.
Kars-R-Us, Inc. (Kars) and its operators, Michael Irwin and Lisa Frank, solicited charitable donations nationwide on behalf of United Breast Cancer Foundation, Inc. (UBCF), a charity that claims to assist individuals affected by breast cancer, according to a complaint filed by the FTC and states. Kars claimed that vehicle donations would allow UBCF to “save lives” by providing free and low-cost breast cancer screenings. But, in reality, only $126,815 or 0.28% of the more than $45 million that Kars raised was used to provide breast cancer screenings, the complaint alleges.
“Marylanders donated their vehicles to Kars-R-Us thinking they would help save lives, but instead they were mostly just helping the company profit” said Attorney General Brown. “Our Office will always fight to protect the integrity of charitable donations, ensuring that those who choose to give can rest easy knowing their money is going to legitimate causes.”
“The generosity of Marylanders should be encouraged and protected.” said Secretary Lee. “Our office is committed to safeguarding the charitable intent of Maryland’s donors and ending schemes that target Maryland’s citizens. Our office’s work in this matter is a testament to this commitment.”
Under a proposed settlement order reached with the states and the FTC, Kars and its operators face restrictions on future fundraising activities and Irwin, Kars’s president and co-owner until 2022, will be permanently banned from fundraising.
Kars solicited vehicle donations through national and local TV, radio, and online ads in English and Spanish, claiming the donations would allow UBCF to “save lives” by providing free and low-cost breast cancer screenings. Kars tugged at donors’ heartstrings to maximize contributions with little regard for truthfulness or accuracy of the claims it made on behalf of UBCF, the complaint alleges. More than 84,000 well-intentioned people donated their vehicles to Kars. Marylanders specifically donated approximately 1,624 vehicles to Kars between 2018 and 2022, amounting to an estimated $1,045,520.00 worth of charitable contributions.
Between 2017 to 2022 Kars raised more than $45.5 million on behalf of UBCF. The complaint alleges that $34.9 million of those raised funds went to pay Kars, its operators, and its vendors. Of the tiny fraction of funds left to UBCF, most were largely used for other purposes, including generous compensation to UBCF’s CEO.
Kars, Irwin, and Frank knew or should have known that the claims they drafted and made on behalf of UBCF were deceptive or lacked substantiation, the complaint alleges.
The proposed settlement order imposes restrictions on Kars, Irwin, and Frank, including:
· Permanently banning Irwin from fundraising or providing fundraising services to any person, directly or indirectly. He is also prohibited from making misrepresentations in connection with the marketing or sale of any product and service;
· Prohibiting Frank, Kars’s current president and sole owner, from making misrepresentations associated with fundraising, or in the marketing or sale of any other product or service;
· Prohibiting Kars, its employees, and anyone actively working for or engaged with the company from making misrepresentations associated with fundraising, or in the marketing or sale of any other product or service; and
· Requiring Kars and Frank to substantiate fundraising or marketing claims.
Irwin, Frank, and Kars also face a total monetary judgment of $3,882,091, which is partially suspended based on their inability to pay the full amount. If Kars, Frank, and Irwin are found to have lied to the FTC and state partners about their financial status, the full judgment will be immediately payable.
In addition to Attorney General Brown and Secretary Lee, the state agencies joining the FTC in this case include the attorneys general of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, New York, North Carolina, Oklahoma, Oregon, Utah, Virginia, West Virginia, and Wisconsin as well as the secretaries of state of North Carolina and South Carolina; and the Utah Division of Consumer Protection.
The Maryland Office of the Secretary of State registers and regulates all charitable organizations that solicit charitable contributions in Maryland. Together with the assistance of the Maryland Attorney General’s Office, the Secretary of State works to ensure that charitable contributions made by Marylanders go to qualified charitable organizations and are used for the intended purpose.
To find out if a charity is registered to solicit in the State of Maryland, check the SoS-Public Registry. To report other suspected violations of charitable giving laws, please call 410-974-5534. More information on charities can be found on the Secretary of State’s charity home page.
For tips on smart giving, please view the Maryland Attorney General’s Office Consumer Protection Division publication Consumer’s Edge Charitable Giving Tips.“
