California Attorney General Announces Settlement with Kars Over Deceptive Charity Fundraising Scheme

Strategic Insights -

California Attorney General Rob Bonta, along with the Federal Trade Commission (FTC) and 19 states and agencies, announced a settlement with Kars-R-Us.com, Inc. (Kars), its operators, Michael Irwin, and Lisa Frank, for their deceptive charity fundraising scheme. Between 2017 and 2022, Kars raised more than $45.5 million, claiming that funds would be used to provide free and low-cost breast cancer screenings. However, $34.9 million of the funds raised went to Kars, its operators, and vendors, rather than towards breast cancer screenings.

Key Takeaways:

  • Kars raised over $45.5 million between 2017 and 2022, claiming the funds would be used for breast cancer screenings.
  • Only $126,815 (0.28%) of the funds raised was actually used for breast cancer screenings.
  • The solicitation scheme was conducted through national and local TV, radio, and online ads in English and Spanish, targeting Spanish-speaking concentrated markets in Arizona, California, Florida, New Mexico, and Texas.
  • Kars, its operators, and vendors received $34.9 million of the funds raised, rather than using it for breast cancer screenings.
  • The settlement imposes restrictions on Kars, its operators, and vendors, including permanent bans on fundraising and making misrepresentations.
  • Irwin is permanently banned from fundraising, and Frank and Kars are prohibited from making misrepresentations associated with fundraising.
  • Kars, Frank, and Irwin face a total monetary judgment of $3,882,091, partially suspended due to their inability to pay the full amount.

Statistics:

  • $45.5 million: Total funds raised by Kars between 2017 and 2022.
  • $16.7 million: Funds from California donors.
  • $34.9 million: Funds used by Kars, its operators, and vendors.
  • $126,815: Amount used for breast cancer screenings.
  • 0.28%: Percentage of funds raised used for breast cancer screenings.
  • 84,000: Number of well-intentioned people who donated their vehicles to Kars.
  • $3,882,091: Total monetary judgment against Kars, Frank, and Irwin.

Sources:

  • Office of the California Attorney General
  • Federal Trade Commission
  • United Breast Cancer Foundation, Inc. (Source: complaint and stipulated judgment)
  • Local and national TV, radio, and online ads (Source: solicitation scheme described in complaint)
  • Spanish-language media outlets in Arizona, California, Florida, New Mexico, and Texas (Source: Spanish-language ads described in complaint)