AG Shapiro, FTC and 38 AGs Shut Down Massive Charity Telefunding Scam

March 4, 2021 | Topic: Consumers

HARRISBURG – Attorney General Josh Shapiro today announced a settlement concerning a fraudulent telefunding operation that bombarded 67 million consumers nationwide, with 1.3 billion deceptive charitable fundraising calls since 2008. Associated Community Services (ACS) placed 61,526,158 calls to phone numbers in Pennsylvania from Jan. 1, 2016 through Aug. 31, 2019. In some instances, 47,562 Pennsylvania phone numbers were called more than 10 times in a week, 81,200 were called more than three times a day, 271,417 were called two times an hour, and 4,515 were called more than three times an hour.

“ACS duped millions of Americans and took advantage of their generosity for its own financial gain,” AG Shapiro said. “The settlement will ensure that this scam gets hung up on permanently, that the recovered money gets properly allocated, and that the shareholders of these companies are never able to prey on Pennsylvanians again.”

The Pennsylvania Office of Attorney General, along with the Federal Trade Commission and 46 agencies from 37 states and the District of Columbia, has entered into a settlement with ACS and a number of related defendants in relation to the charges that they swindled generous Americans into donating to charities that failed to provide the services they promised. ACS collected more than $110 million using this deceptive method. Per the terms of the settlement, the shareholders of ACS and its related corporations are permanently banned from telemarketing.

Senior managers of ACS, which shut down in September 2019, formed Directele and the Dale Corporation (Dale) and purchased donor lists from ACS, and all of ACS’s fundraising clients were shifted over to Directele and Dale.

The settlement requires both Directele and Dale to cease and dissolve operations. The shareholders of Directele and Dale will be prohibited permanently from engaging in charitable fundraising or soliciting for causes related to the ones that they once represented.

“AARP applauds the action taken by Attorney General Shapiro and federal officials to stop a huge telephone charity scam operation that has plagued Pennsylvania residents for years,” said AARP Pennsylvania State Director Bill Johnston-Walsh. “Telemarketing charity scams like this one frequently target older adults and abuse the good will of donors to line their own pockets.”

The complaint alleges that ACS knew the organizations for which they were fundraising spent as little as 0.1% of the money on the charitable causes they claimed to support, and that the defendants kept up to 85% of the money for themselves. ACS made their deceptive pitches on behalf of numerous organizations claiming to support breast cancer patients, victims of house fires, children with autism, and homeless veterans, among other charitable causes.

Additionally, the complaint charges ACS with knowingly violating Telemarketing Sales Rules and with making harassing calls. ACS called over 1.3 million phone numbers ten times in a single week, 7.8 million numbers more than twice an hour, and called more than 500 numbers 5,000 times or more.

The individual shareholders of ACS are paying $450,000 and the individual shareholders of Directele are paying $50,000 for a total of $500,000. The funds being surrendered by the defendants will be contributed to charities that operate in all 38 states, and the District of Columbia, affected by the telemarketing scams, and support causes similar to those for which the defendants solicited.

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