Minnesota Attorney General files lawsuit alleging deceptive cause marketing

The Minnesota Attorney General’s office recently filed a lawsuit against TVI, Inc., which does business as Savers, a second hand retail store chain, alleging that Savers deceived consumers as to the portion of its sales that are donated to nonprofit charities.

The Minnesota Attorney General’s office recently filed a lawsuit against TVI, Inc., which does business as Savers, a second-hand retail store chain, alleging that Savers deceived consumers as to the portion of its sales that are donated to nonprofit charities. Consumers can donate used clothing and household goods to Savers, which will then sell those donated items. Savers advertises that a portion of the proceeds of each sale go to select charities.

The AG’s office first began investigation Savers in 2014 and released its report which found that Savers donated approximately 1% of the sale price of clothing to charitable organizations and did not donate any portion of the sales from non-clothing items. The complaint alleges that Savers misleads consumers to believe that their donations will substantially benefit the charitable mission of individual charities when in practice Savers donates only a small portion from the sales of donated clothing. In addition, some consumers may have been led to believe that the items were being donated directly to the charity as opposed to being provided to Savers for its selling purposes.

Finally, the complaint alleges that Savers failed to comply with the state's professional fundraiser laws and regulations, including failure to register as a professional fundraiser and failure to file financial reports regarding its fundraising activities.

TIP: A number of states regulate cause marketing activities, including promotions advertising that the sale of a product will result in a donation to a charity or directly soliciting and collecting donations for a charity. Regulations in several states may require advance registration, filing bonds, and/or filing financial reports, and many other states have disclosure requirements to ensure transparency regarding the amount of the donation that will be made. A company planning on engaging in any form of cause marketing campaign should inquire whether there are state laws that may regulate those activities.