FTC and 19 States Act to Stop a Deceptive Cancer Charity Fundraising Scheme

The Federal Trade Commission, along with 22 agencies from 19 states, stopped a deceptive charity fundraising scheme and its operators who made false or deceptive claims to U.S. donors.

Kars-R-Us.com, 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.

Under a proposed settlement order reached with the FTC and its state partners, 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.

"This case should send a strong message to fundraisers that the FTC will take action if they misrepresent the truth and exploit the kindness of generous donors for their own gain," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection. "We are grateful to our state partners for joining this effort to protect the public from fundraising schemes like this one."

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.

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 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 breast cancer-related 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 or 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 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.

The state agencies joining the FTC in this case include the attorneys general of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, New York, North Carolina, Oklahoma, Oregon, Utah, Virginia, West Virginia, and Wisconsin as well as the secretaries of state of Maryland, North Carolina, and South Carolina; and the Utah Division of Consumer Protection.

The Commission vote authorizing the staff to file the complaint and stipulated final orders was 3-0. The FTC filed the complaint and final orders in the U.S. District Court for the Central District of California.

Consumers looking for more information about how to donate safely and avoid charity scams can find it on the FTC's website.