How Multi-State Action Is Protecting Donors from Cancer Charity Scams

A massive, nationwide vehicle donation scheme that allegedly defrauded tens of thousands of donors has been shut down. The Federal Trade Commission (FTC) and 22 state agencies from 19 states coordinated the legal action. The scheme promised to fund breast cancer screenings but directed almost no money to the cause.

Maryland Attorney General Anthony G. Brown announced a proposed settlement with Kars-R-Us, Inc. and its operators. The company raised over $45 million for the United Breast Cancer Foundation (UBCF). Investigators allege only a tiny fraction was used for its promised purpose.

Charitable Promises Revealed as Deceptive Practice

According to the complaint, Kars solicited over 84,000 vehicle donations through advertising. The ads claimed contributions would “save lives” by funding free and low-cost breast cancer screenings. In reality, only $126,815 was used for screenings between 2017 and 2022.

This amount represents a mere 0.28% of the total funds raised. The vast majority of the money was allegedly funneled elsewhere. Attorney General Brown condemned the impact on Maryland residents who donated in good faith.

“Marylanders donated their vehicles to Kars-R-Us thinking they would help save lives,” Brown said. “Instead they were mostly just helping the company profit.” Marylanders donated an estimated 1,624 vehicles, contributing over $1 million to the scheme.

Settlement Imposes Fundraising Ban and Financial Penalties

The proposed settlement imposes severe restrictions on the operators. Michael Irwin, a former president and co-owner, faces a permanent ban from all fundraising activities. He is also prohibited from making misrepresentations in marketing.

Lisa Frank, the current president and sole owner, and the company itself face strict new rules. They must substantiate all future fundraising and marketing claims. They cannot make misrepresentations related to charitable donations.

Kars, Irwin, and Frank face a total monetary judgment of $3,882,091. This judgment is partially suspended due to their claimed inability to pay the full amount. The full sum becomes payable immediately if they are found to have lied about their finances.

The resolution of this vehicle donation fraud case highlights the critical need for donor vigilance. Authorities have sent a strong message against exploiting public generosity for personal gain. This landmark action aims to restore trust in legitimate charitable vehicle donation processes.

Info at your fingertips

How did the vehicle donation fraud work?

The company, Kars-R-Us, advertised nationally to solicit car donations. It promised the proceeds would fund life-saving breast cancer screenings through the United Breast Cancer Foundation.

What happens to the company operators now?

One operator is permanently banned from all fundraising. The other and the company itself must follow strict new truth-in-advertising rules. They also face a multi-million dollar judgment.

How much money was actually used for cancer screenings?

Only $126,815 was used for breast cancer screenings. This is just 0.28% of the more than $45 million raised from over 84,000 vehicle donations.

Where did the rest of the donation money go?

The FTC and state complaints allege that Kars, its operators, and vendors received $34.9 million. Funds that reached the charity were largely used for other purposes, including executive compensation.

How can I verify a charity before donating?

Maryland residents can check a charity’s registration status via the Secretary of State’s Public Registry. Always research an organization before donating a vehicle or money.