Schuette Sues Texas Fundraiser for Deceptive Clothing Donation Bins

Bins said “100% of market value” of every donation went to charity, but charity received just 6% of total revenue generated

LANSING – Michigan Attorney General Bill Schuette announced a lawsuit against Texas-based clothing donation bin operator ATRS, Inc.

ATRS owns and operates 251 clothing donation bins in Michigan. The bins state that the Michigan Humane Society “receives 100% of the market value of every donation received at this location.” However, by contract, ATRS pays the Michigan Humane Society just $.02 per pound. For 2016, donations to the bins generated $835k in revenue for ATRS, an average of $.34 per pound; ATRS paid the Michigan Humane Society $49k ($.02 per pound) for these items, which equals just 6% of revenue generated from the bins.

“These bins are deceptive and have misled Michigan residents regarding the true beneficiary of the donated clothes,” said Schuette. “Donors wanted to benefit the Michigan Humane Society—not some business in Texas. Michigan law requires that charitable solicitations be truthful. It’s not a lot to ask, and Michigan donors deserve this.”

The lawsuit seeks restitution, civil penalties of up to $10,000 per violation, and other relief.

Background

ATRS came to the attention of the Attorney General’s Charitable Trust Section during the investigation of another professional fundraiser Golden Recyclers. (In early 2017, Golden Recyclers agreed to pay $35k for deceptively operating its clothing donation bins.)

ATRS owns and operates 251 bins throughout Michigan, including Detroit, Lansing, Jackson, Kalamazoo, Battle Creek, and surrounding areas. ATRS’s sole Michigan client is the Michigan Humane Society. By its contract with the Michigan Humane Society, ATRS pays the Michigan Humane Society $.02 per pound for all items donated in the Michigan Humane Society-labeled bins.

As part of its 2016 fundraising license renewal, ATRS submitted a campaign financial statement showing it had collected roughly $50k for the Michigan Humane Society, but reporting no campaign costs. In light of ATRS’s $.02 per pound contract with the Michigan Humane Society, this campaign report appeared false, so the Attorney General began investigating. The investigation confirmed that ATRS was not disclosing hundreds of thousands of dollars of campaign costs; moreover, the investigation revealed that ATRS’s bins included deceptive stickers that misrepresented that 100% of the market value of donated items benefited the Michigan Humane Society.

In April 2017, the Attorney General issued a Notice of Intended Action against ATRS and ordering it to cease using the deceptive stickers. Since that time, ATRS has covered up the “100%” portion of the sticker, but was not able to agree to a penalty, leading to the present lawsuit.

Charitable Solicitations Resources

Complaints regarding charitable solicitations may be filed through the Attorney General’s online complaint form, or by mailing the Charitable Trust Section at P.O. Box 30214, Lansing, MI 48909-7714, or by emailing the Charitable Trust Section.

To assist individuals in making wise decisions regarding which charitable donations to support, Attorney General Schuette established an online searchable database for charities. The Attorney General also publishes an annual professional fundraising charitable solicitation report. Through these resources, users have access to information to aid them in determining which charities are worth supporting—and which are not. The Attorney General’s Charitable Trust Section is also available at 517-373-1152 to answer inquiries about a charity.


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