Michigan Attorney General Bill Schuette today announced a Notice of Intended Action and Cease and Desist Order against for-profit clothing donation bin operator A.T.R.S. of Houston, Texas, alleging over 300,000 violations for falsely labeling the 251 clothing bins it operates for the Michigan Humane Society.
The A.T.R.S.-operated bins state that the Michigan Humane Society “receives 100% of the market value of every donation received at this location.” However, by contract, A.T.R.S. pays the Michigan Humane Society just $.02 per pound. For 2016, donations to the bins generated $835k in revenue for A.T.R.S., an average of $.34 per pound; A.T.R.S. paid the Michigan Humane Society $.02 per pound for these items, or $49k, which equals just 6% of the market value of the donated clothes.
“Michigan residents deserve to know if the donation they make will have an impact,” said Schuette. “Due to the alleged deceptive marketing of this company, residents who donate to these bins across the state are led to believe that the Michigan Humane Society is getting a large amount of their donation which is untrue and cannot be tolerated.”
The Notice of Intended Action alleges 319,274 violations, with maximum penalties of $10,000 per violation. It also orders A.T.R.S. to cease and desist these violations and gives them twenty-one days to resolve the matter or face a civil action in court.
Case Background
A.T.R.S Inc. came to the attention of the Attorney General’s Charitable Trust Section during the investigation of another professional fundraiser Golden Recyclers. (Golden Recyclers recently agreed to pay $35k for deceptively operating its clothing donation bins.)
A.T.R.S operates 251 bins throughout Michigan, including Detroit, Lansing, Jackson, Kalamazoo, Battle Creek, and surround areas. A.T.R.S.’s sole Michigan client is the Michigan Humane Society. By its contract with the Michigan Humane Society, A.T.R.S. pays the Michigan Humane Society $.02 per pound for all items donated in the Michigan Humane Society-labeled bins.
As part of its 2016 fundraising license renewal, A.T.R.S. submitted a campaign financial statement showing it had collected roughly $50k for the Michigan Humane Society, but reporting no campaign costs. In light of A.T.R.S.’s $.02 per pound contract with the Michigan Humane Society, this campaign report appeared false, so the Attorney General began investigating. The investigation confirmed that A.T.R.S. was not disclosing hundreds of thousands of dollars of campaign costs; moreover, the investigation revealed that A.T.R.S.’s bins included deceptive stickers that misrepresented that 100% of the market value of donated items benefited the Michigan Humane Society.
Charitable Solicitations Resources
Complaints regarding charitable solicitations may be filed through the Attorney General’s online complaint form, or by mailing the Charitable Trust Section at P.O. Box 30214, Lansing, MI 48909-7714, or by emailing the Charitable Trust Section.
To assist individuals in making wise decisions regarding which charitable donations to support, Attorney General Schuette established an online searchable database for charities. The Attorney General also publishes an annual professional fundraising charitable solicitation report. Through these resources, users have access to information to aid them in determining which charities are worth supporting—and which are not. The Attorney General’s Charitable Trust Section is also available at 517-373-1152 to answer inquiries about a charity.
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More information can be found here.