Utah and the FTC Act to Stop a Deceptive Cancer Charity Fundraising Scheme

SALT LAKE CITY, Utah—Utah and the Federal Trade Commission filed an agreement in federal court yesterday with Kars-R-Us.com and its operators, who are accused of having devised a national charity fraud scheme with more than $45.5 million in revenue, by falsely and fraudulently representing how donations would be used.  The Utah Department of Commerce’s Division of Consumer Protection and the Office of the Utah Attorney General claim Kars falsely represented donations would go toward saving lives.  Eighteen other states joined the lawsuit underlying the agreement and have asked a court to order it as a stipulated judgment.

Kars and its operators, Michael Irwin and Lisa Frank, solicited charitable donations for United Breast Cancer Foundation, Inc. (UBCF), a charity that claimed to assist individuals affected by breast cancer, according to the lawsuit filed by Utah, the FTC, and other states. Kars falsely represented that vehicle donations would enable UBCF to “save lives” by providing free and low-cost breast cancer screenings. But, in reality, only $126,815 or 0.28% of the total raised was used to provide actual health screenings, the complaint alleges. 

Utahns donated 935 vehicles and $365,671 to Kars between 2017 and 2022.

Kars solicited vehicle donations through national and local TV, radio, and online ads in English and Spanish, claiming the donations would allow UBCF to provide free and low-cost breast cancer screenings. The complaint alleges that Kars effectively “tug(ged) at donors’ heartstrings” to maximize contributions with little regard for truthfulness or accuracy of the claims it made as to how the funds from the donations would be used. Nationally, more than 84,000 well-intentioned people donated their vehicles to Kars. 

According to the agreement, Irwin, Frank, and Kars face a total 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 immediately payable.

The proposed settlement permanently bans Irwin from fundraising or helping others to fundraise.  It also institutes ongoing guardrails to prevent Frank, Kars, and its employees from making misrepresentations while fundraising, including requiring them to substantiate any fundraising claim. 

Between 2017 and 2022, Kars raised more than $45.5 million through this scheme. The complaint alleges that $34.9 million of those raised 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 were deceptive or lacked substantiation, the complaint alleges. 

The states and state agencies joining Utah and the FTC in this case include Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, New York, North Carolina, Oklahoma, Oregon, Virginia, West Virginia, and Wisconsin as well as the secretaries of state of Maryland, North Carolina, and South Carolina.

The Commission vote authorizing the staff to file the complaint and stipulating final orders was 3-0. The FTC filed the complaint and final orders in the U.S. District Court for the Central District of California. 

The Utah Division of Consumer Protection, led by Director Katherine Hass, sincerely appreciates Douglas Crapo, Marilee Miller, Stevenson Smith, and Peishen Zhou at the Office of the Utah Attorney General for their dedicated work on this case and for representing the Division.

The public should investigate any charity asking for money or something of value.  If you believe you have encountered a charity that has made solicitation misrepresentations or is fraudulently operating a charity, please contact the Division of Consumer Protection at dcp.utah.gov.