"The Supreme Court ruled Monday that states can press fraud charges against telemarketers or other fund-raisers who deceive potential donors about how much of a contribution really goes to charity."
Lower courts had held that prior Supreme Court rulings had established such activities on the part of telemarketers fell under the free speech protections of the Constitution.
"While bare failure to disclose that information directly to potential donors does not suffice to establish fraud, when nondisclosure is accompanied by intentionally misleading statements designed to deceive the listener, the First Amendment leaves room for a fraud claim," Justice Ruth Bader Ginsburg wrote for the court.
In a unanimous ruling the Court agreed that Illinois may maintain an action against a telemarketing firm that raised more than $8 million for a Vietnam veterans' charity but pocketed 85 percent of the donations. Fund-raisers do not necessarily have to disclose the costs of running a charity drive. However, they may not lie about it, as in this case where would-be donors had been told their money would go for food baskets, job training and other services for needy veterans, with no mention that the great majority of the funds were actually retained by the telemarketing firm.
In actuality, this one appeared to be a "no-brainer." I have not read nor reviewed the opinions of the lower courts, however. I am sure that there was some very compelling precedent that controlled their findings, and that the Supreme Court was able to distinguish in reversing that supposed "First Amendment" protection. [full story]
Posted by Tiger at May 7, 2003 01:41 PM