Alleged Charity Scam Results in $1.7M Class Action Settlement

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Ohio-based telemarketing company InfoCision Inc. has reached a $1.7 million class action settlement over allegations that it ran a charity scam that bilked millions of dollars out of consumers who were solicited by telephone for donations.

InfoCision is the nation’s second-largest privately held teleservices company and holds contracts with some of the largest and most well-known American charitable organizations, including the American Diabetes Association, the American Cancer Society and the March of Dimes Foundation, among others.

Plaintiff Dora Oatman sued InfoCision in 2012 after a Bloomberg news investigation uncovered that the company was keeping more money than it was giving to charities.

Telemarketers & Charities: The Untold Truth

In a Sept. 12, 2012 Bloomberg article titled “Charities Deceive Donors Unaware Money Goes to a Telemarketer,” author David Evans reported that just 22% of the funds InfoCision raised for the American Diabetes Association in 2011 went to the charity. In fiscal 2010, InfoCision kept 100% of the funds it raised for the American Cancer Society – plus $113,006 in fees from the society, according to the organization’s filing with the U.S. Internal Revenue Service and the state of Maine.

According to Evans, major charities compounded the deception by encouraging telephone solicitors to lie.

Evans cited a script approved by the American Diabetes Association for InfoCision telemarketers in 2010 that includes the following line: “Overall, about 75% of every dollar received goes directly to serving people with diabetes and their families, through programs and research.”

Yet that same year, InfoCision’s contract with the association estimated that the charity would keep just 15% of the funds, while InfoCision would keep 85%.

In a 2009 contract with InfoCision, the Cancer Society estimated that the charity would get 44% of the money raised by InfoCision telemarketers, despite approving a script that instructed telemarketers to tell consumers, when asked, that “about 70 cents of every dollar received goes to the programs and services we provide.”

Charitable Donator Fights Back

Oatman alleges in her class action lawsuit that she was one of the many consumers duped by InfoCision’s alleged charity scam.

Oatman says she was contacted by an InfoCision representative purportedly raising money on behalf of the American Cancer Society and the American Heart Association. She says the representative induced her into donating to the charities by misrepresenting how much money was actually going to the charitable organization.

The class action lawsuit brought counts of fraud, negligent misrepresentation and unjust enrichment based on claims that InfoCision misrepresented various facts during telephone fundraising campaigns, including the percentage of funds pledged that the charities ultimately retained, the availability of matching grants, its financial arrangements with the charities, its identity, the possibility that calls could be monitored, and more.

Settlement Gives Back to Charities

InfoCision has maintained its innocence and vigorously denies the allegations but agreed to create a $1.7 million class action settlement fund to resolve the litigation.

The Court preliminarily approved the InfoCision settlement on Dec. 5, 2013 and conditionally certified a Settlement Class consisting of all persons in the United States who received a telephone call from, or placed a telephone call to, InfoCision between Sept. 27, 2008 and the present concerning a charity,that contained any misrepresentation and/or omission of any material fact, and agreed to either donate to, or volunteer to solicit funds on behalf of, a charity.

A Final Fairness Hearing is scheduled for March 28, 2014.

If the InfoCision class action settlement is approved, InfoCision will pay over $1 million to the charities to whom the Settlement Class Members donated, based upon the number of positive-response telephone calls that InfoCision’s records show it handled for each charity. The remaining money from the settlement will go to paying the costs of implementing and administering the settlement, as well as to attorneys’ fees and an incentive award for the plaintiff.

Details on the charities involved in the class action settlement and their plan of allocation can be found in the InfoCision Settlement Agreement.

If the InfoCision class action settlement becomes final, Class Members will release all claims against the company and will be barred from filing or participating in any lawsuit or other legal action against InfoCision arising from or relating to any of the claims raised in the class action lawsuit Oatman v. InfoCision, unless they submit a request for exclusion postmarked no later than Feb. 12, 2014.

More information on the InfoCision Class Action Lawsuit Settlement, including exclusion instructions, can be found at www.InfoCisionClassActionSettlement.com.

The case is Dora Oatman v. InfoCision Inc., et al., Case No. 12-cv-02770, U.S. District Court, Northern District of Ohio, E.D.

Consumers interested in learning about how to avoid a charity scam can learn by visiting ftc.gov/charityfraud.