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For Immediate Release:  
For Further Information Contact:
January 25, 2006

Office of The Attorney General
- Nancy Kaplen, Acting Attorney General

 

Lee Moore
609-292-4791

 

N.J. Enters Settlement Agreement with Massachusetts-Based Professional Fund-Raising Firm;
Certain Direct Mail Solicitations, “Guaranteed Winner” Overtures
by Company Will Cease

TRENTON – New Jersey has entered into a multi-state settlement agreement that resolves allegations of misleading claims against Newport Creative Communications, a professional fund-raising firm that solicits for charities. Under terms of the settlement, Newport is required to stop making direct-mail solicitations that advise recipients they have “already won a prize” or will be “guaranteed” a prize by responding to the solicitation.

Based in Duxbury, Mass., Newport contracted to raise funds in New Jersey on behalf of 44 charities between 2001 and 2003. Using direct mail, the company sought to raise funds using traditional charitable solicitations as well as “sweepstakes” mailings. Thousands of solicitations were sent to New Jersey residents during this period.

New Jersey and the other 18 participating states alleged that, among other things, Newport solicited charitable contributions by making misleading direct mail representations guaranteeing potential donors a prize or claiming that they had already won a sweepstakes prize when, in most cases, no prizes were ever awarded.

“Using sweepstakes claims to solicit money from consumers is nothing new,” said Acting Attorney General Nancy Kaplen in announcing the Newport settlement. “However, any company making sweepstakes-related claims – especially on behalf of charity – must be forthright and honest with consumers, and avoid deceptive tactics. This agreement will ensure that Newport’s future solicitations follow the rules.”

"The reward in making a donation is in knowing that you are helping a charitable organization with its program. Dishonest groups that try to coerce donations with misleading promises of a prize or reward provide a disservice to both the charity and potential donors,” said Division of Consumer Affairs Director Kimberly S. Ricketts. “That is why we require charities doing business in New Jersey, and fund raisers soliciting on behalf of charities, to register annually with Consumer Affairs.”

Under terms of the settlement agreement, Newport must refrain from making direct mail solicitations that indicate the recipient has won a prize or is guaranteed a prize by responding. The firm must also include inserts in future mailings explicitly stating that the consumer has not already won a prize, and that donating to the charity does not improve their chances for winning. In addition, Newport will pay $400,000 to the states to be used for consumer protection initiatives.

Activity that ultimately led to the Newport settlement began with the formation of a multi-state working group to investigate Newport’s fund-raising activities on behalf of, among other entities, seven health-related charities. Upon review of Newport’s various direct-mail solicitation materials, the states became concerned that the materials were misleading to consumers.

Based on this determination, the states entered into negotiations with Newport regarding an Agreement of Voluntary Compliance (AVC).

Under terms of the AVC, Newport must cease, among other things, sending mailings to consumers that:

  • Misrepresent that the recipient has won something or is the “guaranteed winner.”
  • Misrepresent that the consumer has been “confirmed” or is a “verified” winner.
  • Misrepresent that the consumer is subject to “serious” consequences or is “at risk” by failing to reply.
  • Misrepresent that a governmental entity played a role in approving or originating the mailing.
  • Misrepresent that the recipient is the only person, or only one of a few people, who has received such a communication.

Along with New Jersey, the following states are party to the Newport agreement: Arkansas, California, Kentucky, Massachusetts, Michigan, Minnesota, Montana, Nevada, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin.

The Newport matter was handled by DAG Cathleen O’Donnell of the Division of Law’s Consumer Fraud Protection Section and Investigator Luis Balzac from the Division of Consumer Affairs.

Information on registered charities and fund-raising firms is available on the Division of Consumer Affairs Web site www.NJConsumerAffairs.gov/ocp.htm#charity or by calling the Charities Registration Unit at 973-504-6215.

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