The state of Alaska filed civil lawsuits on March 10 against six crowdfunding websites, accusing them of illegally soliciting donations for thousands of Alaska charities without consent.
In complaints filed at Anchorage Superior Court, the consumer protection unit of the Alaska Department of Law said GoFundMe, PayPal, Charity Navigator, Pledgeling Technologies, JustGiving and Network For Good each violated the Alaska Charitable Solicitations Act thousands of times.
That act, in place since 1993, requires state registration for anyone who seeks donations on behalf of a charity.
The suits ask a judge to order the sites shut down the pages devoted to Alaska nonprofits and immediately disburse any donations to those nonprofits. It also asks for “separate civil penalties … of not less than $1,000 and not more than $25,000 per violation.”
According to the complaints, the six crowdfunding sites scraped IRS data to obtain the information of thousands of Alaska nonprofits, then set up donation pages for each of those nonprofits without their consent.
That scraping was part of a nationwide campaign that encompassed almost 1.5 million federally registered organizations.
In some cases, the sites charged fees or encouraged “tips” to themselves during the donation process. In many cases, they poured donations into a third-party account and only released donations to charities that stepped forward to claim them, according to the complaints.
Attorney General-designee Stephen Cox said the state became aware of the issue after California reporters and state officials began investigating why GoFundMe created donation pages for 1.4 million nonprofits without their consent or knowledge.
GoFundMe later took down pages created without consent, but other crowdfunding websites did not. GoFundMe has kept some pages created with the consent of charities.
In a prepared statement, Cox said, “Alaska law is clear: if you’re going to raise money in a charity’s name, you must first get the charity’s consent. These lawsuits are about protecting donors, protecting nonprofits and preserving the public trust that makes charitable giving possible.”
Laurie Wolf is President and CEO of the Foraker Group, which advises Alaska nonprofits and provides them with administrative support. The Foraker Group has been issuing warnings about the issue for months, and Wolf filed an affidavit in support of the lawsuit, as did a representative of the Bethel Community Services Foundation and Bread Line, which operates a food bank in Fairbanks.
By phone on March 10, Wolf said the issue is a matter of consent: “They are impersonating nonprofits across this country, they’re impersonating them without their consent or even their knowledge.”
She said the issue became particularly important last fall, when people across the United States and the world became aware of the devastation caused by ex-Typhoon Halong in Western Alaska.
Many people, not knowing local Alaska charities, simply donated via links they found on internet searches. Some of those donations may have never reached their intended recipients.
If a crowdfunding website operates independently of the charity it intends to benefit, it might interfere with the charity’s own fundraising, she explained.
In addition, donations may be subject to fees or never reach a charity at all, particularly if the charity is unaware that a crowdfunding website is holding money for it to collect.
“We are committed to helping nonprofits reach new supporters by connecting them with the millions of people on our platform who want to make a difference,” said Jeff Platt, communications manager for GoFundMe. “Nonprofit pages were created using publicly available information to help people support nonprofit organizations, with donations going to the intended nonprofit.”
He added, “After hearing feedback from nonprofit leaders in October, we acted quickly to make nonprofit pages fully opt-in, removed and deindexed unclaimed pages and turned off search engine optimization by default.”
This week’s lawsuits in state court rely in large part on the 1993 Alaska Charitable Solicitations Act. That bill passed the Alaska Legislature amid a surge of concern about telemarketers soliciting donations by phone.
The act made no mention of donations by internet, and in state law, it’s still labeled as “telephonic solicitations,” but it goes on to state that under any circumstances it is unlawful to use a charity’s name or symbol without their permission.
Source: Alaskabeacon.com. The Alaska Beacon is an independent, donor-funded news organization.
