Cause-Related Marketing

The past five years have seen a major uptick in FTC enforcement against alleged charity fundraising scams, along with increased multi-state coordination in this space. Regular readers of this blog already know that, by having read this, this, this, and this. On September 15, 2020, the FTC filed a complaint in the U.S. District Court for the Southern District of New York against fundraiser Outreach Calling, its owner and principal Mark Gelvan, two other related organizations, and three additional individuals. The attorneys general of New York, New Jersey, Virginia, and Minnesota joined the FTC as plaintiffs in the lawsuit. Alongside their complaint, the FTC and states filed proposed stipulated orders against each of the defendants.

The FTC and states allege that the defendants engaged in deceptive telemarketing campaigns on behalf of numerous (and now defunct) “sham” charities. According to the complaint, the Outreach Calling entities induced tens of millions of dollars in charitable donations by telling donors that the recipient charities provided assistance to particularly vulnerable populations, such as disabled and homeless veterans, breast cancer patients, law enforcement officers, and children. In fact, say the plaintiffs, the recipient charities spent very little of the money raised – in some cases only 1 or 2 percent of gross donations – on charitable programs. Instead, approximately 90 percent of the funds raised were paid to the Outreach Calling fundraisers; most of the remaining money funded the personal expenses of the charities’ principals.

The FTC and states brought causes of action under Section 5 of the FTC Act, the Telemarketing Sales Rule, and state charity and anti-fraud laws. To resolve the litigation, the parties have agreed to enter into stipulated orders that permanently ban the defendants from charity fundraising and that impose a collective monetary judgment of approximately $58 million. As is typical in cases like this one, the monetary judgment will be suspended because of the defendants’ inability to pay it; however, each of them must surrender certain assets, and Mr. Gelvan will have to sell two homes and grant the FTC a lien and mortgage on three of his properties in order to secure his payment obligations under the proposed order.


Continue Reading FTC Partners with State AGs in Latest Crackdown on Charity Fundraising

Times of national crisis tend to trigger an uptick in charitable solicitations and charitable giving. And for-profit businesses, including recognizable retail brands, want to do all they can to help as well. As the COVID-19 crisis unfolds, with its far-ranging economic and societal repercussions, many brands are engaging in coronavirus-related commercial co-venture (CCV) activities and cause marketing promotions, advertising to consumers that purchase or use of their product or service will benefit a charity or a charitable purpose.

Although the COVID-19 pandemic has resulted in a delayed federal income tax filing deadline, mortgage relief programs, and other types of suspended governmental requirements, the regulations applicable to charitable sales promotions and the commercial coventurers who carry them on remain fully in place. In some ways, compliance with these rules—particularly disclosure requirements—is more important than ever given the increased desire to act now and do good. There is no “pandemic exception” for compliance with states’ CCV laws, or state and federal truth‑in-advertising laws. Indeed, while states may accommodate reasonable filing or registration delays caused by COVID-related business interruptions and the FTC similarly has acknowledged the strain on all businesses right now, these regulators will also crack down on marketing abuses that take advantage of consumers’ generosity or fear during the pandemic. For brands wanting to capitalize on the moment, keep in mind the following basics when it comes to conducting a compliant campaign:


Continue Reading Charitable Sales Promotion Rules and Best Practices: Be Sure to Cross Your T’s and Dot Your I’s During the Pandemic

The Federal Trade Commission (FTC) continues its oversight of charitable fundraising conduct. This month, the FTC issued guidance for both donors who donate to charities through online giving portals and businesses that offer such portals. The agency also warned consumers to be wary of potential charity scams in the wake of recent natural disasters that

The Federal Election Commission (FEC) this week issued a Notice of Proposed Rulemaking, asking for public comment on proposals for requiring “disclaimers” on online ads and fundraising. Under each of two similar proposals, paid Internet ads that expressly advocate for candidates or that solicit political donations must state who paid for the ad and whether it was authorized by a candidate. The rules would impact websites, blast emails, and ads paid for by a political committee, regardless of their content.

The FEC rulemaking responds to mounting concerns about the influence of Russian-linked social media activity during the 2016 presidential election, as well as years of ambiguity about when and how the agency’s rules apply to emerging platforms and technology.


Continue Reading The Federal Election Commission Proposes Rules for Online Political Advertising

Enter to Win!There are certain words and phrases that set the antennae of promotions lawyers – and law enforcers – buzzing. “Everybody wins” comes to mind right away – but there is one little word that can pay out tremendous legal problems and should concern anyone involved in executing sweepstakes and promotions. That word is “raffle.”

While many people use “raffle” interchangeably with “sweepstakes” or “drawing” to designate a legal game of chance that any entity can run, most raffles are illegal under federal and state gambling laws. Narrow exceptions exist for certain activities involving nonprofit organizations, such as charities, but those carve-outs and their accompanying requirements vary from state to state.

The chief problem with raffles is that they, by their nature, contain all three elements of an illegal lottery: (1) the award of a prize; (2) that is determined by chance; and (3) participants must submit consideration to enter.


Continue Reading These Six Letters Can Spell “Trouble” for Sweeps and Promotions

football and foam fingersThis may have been the first year we were more into the game than the ads as it was a well-matched nail biter right to the end, but this is advertising’s biggest night of the year as well as football’s and we were once again not disappointed. While views is likely the best measure of an ad’s success, here is the annual “All about Advertising Law Round Up”.

Our favorite campaign was the Australian Tourism ad featuring Chris Hemsworth and Danny McBride. The campaign encouraged tourism under the rubric of filming of a Crocodile Dundee sequel. The movie has its own IMDb page and related Twitter hype. But there is no movie. It is all part of the tourism ad campaign. This is fake news without the political baggage, creating buzz and interest for the product offering. Well played!


Continue Reading Big Game Fun Includes Viking Disclaimers and Fake News

online fundraisingLast week, the Federal Trade Commission (FTC) and the National Association of State Charity Officials (NASCO) hosted “Give & Take: Consumers, Contributions, and Charity,” a conference exploring consumer protection issues in the changing landscape of charitable giving. Day One of the conference kicked off with introductory remarks by Acting Director of the Bureau of Consumer Protection Tom Pahl, as well as Colorado Attorney General Cynthia Coffman (Day Two was not open to the public). Some of our readers may recognize General Coffman’s name because she was a panelist at Venable’s 2016 Advertising Law Symposium, where she also expressed her state’s strong interest in combatting charitable solicitation fraud. Government enforcers are clearly paying more attention to this industry, as we have written before.
Continue Reading Highlights of the FTC and NASCO Conference – Give & Take: Consumers, Contributions, and Charity

football refereeIt’s our favorite time of year, when we get to see the best, boldest, and bravest duke it out. Oh sure, there’s the football, but we’re talking about the ads! It’s one of the busiest nights of the year for ad lawyers, enjoying ads we worked on come to life (and seeing the disclaimers we lovingly and painstakingly crafted) and responding in real time to “can we tweet this?” We blog every year about our favorites (see here and here and here and here) and trends. We were happy with a game in overtime, as it meant – that’s right – MORE ADS! And we understand social media was up over last year but did not exceed 2015’s record numbers. But still, 27.6M tweets, 240M Facebook interactions, and 150M Instagram interactions is pretty big stuff.
Continue Reading Annual Big Game Ad Review

Among other things (National Pizza Month, anyone?), October was Breast Cancer Awareness Month and the Washington Post recently published an interesting article about the connection between retail apparel marketing and breast cancer awareness efforts. The combination of the two – “pink marketing” – is as ubiquitous during the month of October as Halloween candy and pumpkin-spiced lattes.

White House Goes PinkOver time, cancer charities have sought to increase donor awareness of their mission and boost fundraising by partnering with for-profit corporations. This cause-related marketing can be mutually beneficial: the charity is helped by the company’s marketing budget and public relations heft, while the company enhances its goodwill with customers (indeed, some research supports the notion of a “halo effect” for retailers that consumers believe are socially conscious). Thus, we see successful partnerships like the one featured in the Washington Post article between the National Football League and the American Cancer Society, or relationships between World Wrestling Entertainment and Susan G. Komen. In October, hulking athletes incorporate pink into their uniforms and leap from pink wrestling ropes. Celebrities wear pink ribbons and retailers offer pink-colored versions of their products. Even the White House goes pink.


Continue Reading Don’t Let “Pink” Marketing Lead to Others Seeing Red