Group Must Pay $700K Penalty For Allegedly Profiting From ‘Charity’ Donation Bins

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How do you turn a charitable donation into a scam? Take the donated item and sell it for a profit, instead of giving it to the needy. New York Attorney General Eric Schneiderman said his office has reached a settlement with a for-profit company accused of doing just that, by way of more than 1,100 clothing donation bins scattered throughout the New York City area.

According to Schneiderman’s office, Thrift Land USA allegedly set itself up as a charitable outfit, using logos for Big Brothers Big Sisters of Rockland County and I Love Our Youth to “trick and mislead the public into believing that the clothing it collected would benefit the charity whose name and logo appeared on its bins.”

Instead, Thrift Land turned around and sold the clothing at “huge profit” and the charities featured on the bins only got a small, monthly fee for use of their name and logo.

As part of the settlement resolving the above allegations, Thrift Land has agreed to pay $50,000 in penalties and costs, and will give $650,000 to two not-for-profit organizations “so that the charitable intent of the people who placed clothing in its bins will be fulfilled,” Schneiderman’s office said.

It will also be required to attach a prominent disclosure label on all of its bins, nothing that none of the clothing people put in will benefit a charity, reading: “This is not a charity. Donated items deposited here will NOT support any charity and are not charitable donations, but will be sold for profit.”

Schneiderman’s investigation also found that Thrift Land engaged in false advertising with mailings and its website, both which misled the public to believe that proceeds from the sale of used clothing would go toward helping the two charitable groups.

On top of all of the above, Schneiderman’s office found that Thrift Land deceived people who scheduled home pickups of used clothing by answering the phone using the name I Love Our Youth, and “falsely led people who arranged for home pickup to believe that their donations were tax deductible.”

I Love Our Youth will also pay $50,000 to settle claims that it continued to let Thrift Land use its name to reap rewards from the scheme, even after the charity’s state registration and federal tax-exempt status had been revoked. The chairman of the group has also agreed to dissolve it.

Big Brother Big Sisters of Rockland County has agreed to keep a closer eye on any charitable solicitations or advertisements in its name to resolve allegations that it had failed to oversee what Thrift Land was doing with its name and logo.

“Duping members of the public into thinking that they are making a charitable donation, when in fact they are enriching a for-profit corporation, is both deceptive and illegal,” said Attorney General Schneiderman. “When a for-profit company masquerades as a charity, my office will hold it and its owners accountable.”

by Mary Beth Quirk via Consumerist