New Crackdown On Fundraising Frauds

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The Federal Trade Commission (FTC) and state charity regulators across the country have embarked on a project called "Operation False Alarm" to crack down on frauds that involve fundraising for fire, police and other public safety organizations. Their targets are professional fund-raisers who misrepresent their ties to fire-rescue or police organizations and use deceptive practices to con the public into giving money to a non-existent or questionable charity. And, even when legitimate, there have been too many cases in which little or no money reached the organization it was supposed to help.

Public fundraising to support volunteer fire departments, rescue squads and career firefighters' organizations has a long tradition in the fire-rescue service and is a perfectly acceptable activity. It has produced millions of dollars to buy apparatus and equipment, maintain volunteer companies and provided money for benevolent groups that benefit career firefighters. But, it also is an activity that lends itself to scams by unscrupulous con artists and it requires close supervision by fire-rescue organizations.

In this era of taxpayer revolts and tight budgets, public fundraising has become more important to many departments. Some that were totally dependent on tax money have reluctantly turned to fundraising drives to make up for drastic budget cuts. Unfortunately, with no previous experience in this type of activity, they can become victims of the fundraising con men. When that happens, the end result is not much money, tarnished reputations and a reluctance on the part of the public to contribute to legitimate charitable causes.

The problem is widespread and serious enough for the FTC to launch "Operation False Alarm," which also includes attorneys general and charity regulators in every state. They already have brought 57 law enforcement or regulatory actions against fundraisers who engaged in illegal or deceptive practices. Along with legal action, the FTC, the National Associa-tion of Attorneys General and the Better Business Bureaus have teamed up in an educational campaign to warn the public of "badge related" fraud. They also want to help fire and police organizations avoid being victimized by crooked fundraisers.

The worst offenders are the criminals who used telephone solicitations and direct mail to raise money for phony charities that have no connection with any police or fire-rescue organization. Another scam is to con small businesses into buying ads in a magazine or program that doesn't exist or, when published, is nothing but advertising with no editorial content of any kind. It is important for fire departments and benevolent organizations to be alert to this type of fraud taking place in their area so that people can be warned not to contribute when they inquire about the legitimacy of a fundraising campaign.

Nationwide, the police seem to be most vulnerable to con games carried out in their name and most of the cases presented at a Washington press conference involved police organizations. However, the fire-rescue service has its share of the problem. Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, warned: "Badge-fraud schemes betray the public trust...Legitimate fundraising efforts by local police, firefighters and other community service organizations suffer as a result."

Perhaps of greatest concern to fire organizations are professional fundraisers who are hired to put on a fundraising drive and end up with most of the money. According to the FTC, they often keep 80% or more and generate bad feelings in the community because of their high-pressure tactics. If your department or organization is going to get involved with a professional fundraiser, it is essential to investigate with others who have used the same service to learn from their experience. Also contact local and state regulators and the Better Business Bureau to determine if any complaints have been filed.

Personally, I've always been against the use of professional fundraisers in the fire-rescue service. I've been a member of volunteer companies that ran a weekly bingo game, sold raffle tickets and ads for a newsletter and went door-to-door once each year to raise money. The people we protected were glad to see us and gave generously because they appreciated the service we provided. But everything was done by our own firefighters and our officers had total control over how we went about doing it and what was said when we rang doorbells to ask for money.

I don't like the idea of someone who is not a firefighter soliciting the public on behalf of my company. You can't control the tactics non-members use or what they say on the phone. It's your reputation that's on the line and all it takes is a few negative incidents to damage the positive image you have worked so hard and long to build. There isn't enough money to make up for that.

If your department is up against the wall because of budget cuts, think twice before getting involved in public fundraising and, if you have to do it, consider doing it yourself. If you intend to hire a professional fundraiser, check that person out and call the FTC's Bureau of Consumer Protection at (202) 326-3650 to get copies of Facts for Nonprofits, a pamphlet that offers expert guidance on the pitfalls and dangers of fundraising.

Also consider this idea: instead of fundraising, it might be more productive in the long run to concentrate your energy on educating the taxpayers and elected officials as to why you need more money in the budget to provide the proper level of fire protection and emergency medical service. Once political leaders think you will make up for budget cuts by staging a charity drive, the one thing you can count on is more budget cuts.


Hal Bruno, a Firehouse® contributing editor, is the ABC News political director and served many years as a volunteer firefighter.

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