OKLAHOMA CITY – A deceptive charity fundraising scheme and its operators who are accused in a 51-page complaint of raising millions of dollars to fund breast cancer screenings, but spending only a fraction of the donations on those procedures, have been outed and stopped.
The Federal Trade Commission, Oklahoma’s Attorney General’s office, and 21 other state agencies from 19 states have reached a proposed settlement with Kars-R-Us.com and its operators, Michael Irwin and Lisa Frank. Kars-R-Us.com, Inc., also doing business as DONATE CAR 2 VETERANS, is a corporation with its principal place of business in Glendora, California.
Between at least 2012 and May 2023, Kars-R-Us.com, led by Irwin and Frank, deceptively solicited charitable donations nationwide on behalf of the United Breast Cancer Foundation, Inc., an entity that purports to assist individuals affected by breast cancer.
Kars claimed that vehicle donations would allow UBCF to “save lives” by providing free and low-cost breast cancer screenings. But in reality, only $126,815 of the more than $45 million that Kars raised was used to provide breast cancer screenings, the complaint alleges.
Under the proposed settlement order reached with Oklahoma, the FTC and the other state partners, Kars and its operators face restrictions on future fundraising activities. In addition, Irwin, Kars’ former president and co-owner, will be permanently banned from fundraising.
Kars solicited vehicle donations through national and local TV (including CBS, Fox, ABC, and NBC, Univision, Azteca America, Telemundo, and UniMas), radio and online ads in English and Spanish, claiming the donations would allow UBCF to save lives by providing free and low-cost breast cancer screenings.
Kars tugged at donors’ heartstrings to maximize contributions with little regard for truthfulness or accuracy of the claims it made on behalf of UBCF, the complaint alleges. More than 84,000 well-intentioned people donated their vehicles to Kars, investigators discovered.
From 2017 to 2022, Kars raised more than $45.5 million on behalf of UBCF. The complaint alleges that $34.9 million of those funds went to pay Kars, its operators and its vendors. Of the fraction of funds left to UBCF, most were largely used for other purposes, including generous compensation to UBCF’s CEO.
Kars, Irwin and Frank knew or should have known that the breast cancer-related claims they drafted and made on behalf of UBCF were deceptive or lacked substantiation, the complaint charges.
Nevertheless, the defendants “used those claims because they were effective in generating generous donations,” the complaint asserts. “Indeed, in 2019, …Irwin acknowledged to UBCF’s CEO that he just needed the ‘disease’ to make money,” and UBCF was their “most lucrative client, bringing in as much as 70% to 90% of Defendants’ total revenue each year.”
Kars’ website claimed that, “Probably the best reason for donating a car, boat or RV is that it helps a charity. Your old car might not seem that important to you, but the proceeds from the sale can provide continued services to the charity you wish to support. Donation 2 Charity will get you the maximum price at auction and 75% to 80% of the gross from each auto donation goes to the charity.”
In fact, though, barely over one-fourth of 1% (just 0.28%) of the more than $45 million that Kars raised was used to provide breast cancer screenings, records reflect.
Irwin was Kars’ president and co-owner until he retired at the end of 2022; since January 2023, he has continued to provide consulting services to Kars, the complaint notes. Lisa Frank has been Kars’ president and sole owner since January 2023; before then, she was the vice president and co-owner of Kars with Irwin.
Irwin and Frank each “profited more than $2 million from Kars’s deceptive UBCF fundraising campaigns,” the complaint states.
The proposed settlement order imposes restrictions on Kars, Irwin and Frank, including:
• Permanently bans Irwin from fundraising or providing fundraising services to any person, directly or indirectly.
• Prohibits Irwin from making misrepresentations in connection with the marketing or sale of any product or service.
• Prohibits Frank from making misrepresentations associated with fundraising, or in the marketing or sale of any other product or service.
• Prohibits Kars, its employees and anyone actively working for or engaged with the company from making misrepresentations associated with fundraising, or in the marketing or sale of any other product or service; and
• Requires Kars and Frank to substantiate fundraising claims.
Irwin, Frank and Kars also face a monetary judgment of $3,882,091, which is partially suspended based on their inability to pay the full amount. If Kars, Frank and Irwin are found to have lied to the FTC and state partners about their financial status, the full judgment will be payable immediately.
Other state agencies that joined the case include the attorneys general of Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, New York, North Carolina, Oregon, Utah, Virginia, West Virginia and Wisconsin; the secretaries of state of Maryland, North Carolina and South Carolina; and the Utah Division of Consumer Protection.
The FTC vote authorizing the staff to file the complaint and stipulated final orders was 3-0. Those documents were filed in the U.S. District Court for the Central District of California.