TRENTON
– New Jersey has entered into a
multi-state settlement agreement that
resolves allegations of misleading claims
against Newport Creative Communications,
a professional fund-raising firm that
solicits for charities. Under terms of
the settlement, Newport is required to
stop making direct-mail solicitations
that advise recipients they have “already
won a prize” or will be “guaranteed”
a prize by responding to the solicitation.
Based in Duxbury, Mass., Newport contracted
to raise funds in New Jersey on behalf
of 44 charities between 2001 and 2003.
Using direct mail, the company sought
to raise funds using traditional charitable
solicitations as well as “sweepstakes”
mailings. Thousands of solicitations were
sent to New Jersey residents during this
period.
New Jersey and the other 18 participating
states alleged that, among other things,
Newport solicited charitable contributions
by making misleading direct mail representations
guaranteeing potential donors a prize
or claiming that they had already won
a sweepstakes prize when, in most cases,
no prizes were ever awarded.
“Using
sweepstakes claims to solicit money from
consumers is nothing new,” said
Acting Attorney General Nancy Kaplen in
announcing the Newport settlement. “However,
any company making sweepstakes-related
claims – especially on behalf of
charity – must be forthright and
honest with consumers, and avoid deceptive
tactics. This agreement will ensure that
Newport’s future solicitations follow
the rules.”
"The
reward in making a donation is in knowing
that you are helping a charitable organization
with its program. Dishonest groups that
try to coerce donations with misleading
promises of a prize or reward provide
a disservice to both the charity and potential
donors,” said Division of Consumer
Affairs Director Kimberly S. Ricketts.
“That is why we require charities
doing business in New Jersey, and fund
raisers soliciting on behalf of charities,
to register annually with Consumer Affairs.”
Under terms of the settlement agreement,
Newport must refrain from making direct
mail solicitations that indicate the recipient
has won a prize or is guaranteed a prize
by responding. The firm must also include
inserts in future mailings explicitly
stating that the consumer has not already
won a prize, and that donating to the
charity does not improve their chances
for winning. In addition, Newport will
pay $400,000 to the states to be used
for consumer protection initiatives.
Activity that ultimately led to the Newport
settlement began with the formation of
a multi-state working group to investigate
Newport’s fund-raising activities
on behalf of, among other entities, seven
health-related charities. Upon review
of Newport’s various direct-mail
solicitation materials, the states became
concerned that the materials were misleading
to consumers.
Based on this determination, the states
entered into negotiations with Newport
regarding an Agreement of Voluntary Compliance
(AVC).
Under terms of the AVC, Newport must cease,
among other things, sending mailings to
consumers that:
-
Misrepresent that the recipient has
won something or is the “guaranteed
winner.”
- Misrepresent
that the consumer has been “confirmed”
or is a “verified” winner.
- Misrepresent
that the consumer is subject to “serious”
consequences or is “at risk”
by failing to reply.
- Misrepresent
that a governmental entity played a
role in approving or originating the
mailing.
- Misrepresent
that the recipient is the only person,
or only one of a few people, who has
received such a communication.
Along
with New Jersey, the following states
are party to the Newport agreement: Arkansas,
California, Kentucky, Massachusetts, Michigan,
Minnesota, Montana, Nevada, North Carolina,
Ohio, Oregon, Pennsylvania, South Carolina,
Tennessee, Texas, Virginia, Washington
and Wisconsin.
The Newport matter was handled by DAG
Cathleen O’Donnell of the Division
of Law’s Consumer Fraud Protection
Section and Investigator Luis Balzac from
the Division of Consumer Affairs.
Information on registered charities and
fund-raising firms is available on the
Division of Consumer Affairs Web site
www.NJConsumerAffairs.gov/ocp.htm#charity
or by calling the Charities Registration
Unit at 973-504-6215.
