CALIFORNIA – California attorney general Rob Bonta, the FTC, and 19 other states announced a settlement on September 25 with Kars-R-Us.com, Inc. and its operators, Michael Irwin and Lisa Frank, over a deceptive charity fundraising scheme.
From 2017 to 2022, Kars raised over $45.5 million — including $16.7 million from California donors, through vehicle donations for the United Breast Cancer Foundation.
The scheme promised vehicle donations would ‘save lives’ by funding cancer screenings, but $34.9 million of the $45.5 million raised went to Kars, its operators, and vendors instead.
The judgment restricts Kars, Irwin, and Frank from future fundraising, and permanently bans Irwin from the practice.
Only needed the ‘disease’ to make money
According to the complaint, from 2012 to May 2023, Kars’ English- and Spanish-language ads on TV, radio, and online claimed vehicle donations to UBCF would ‘save lives’ by funding free and low-cost breast cancer screenings.
The Spanish ads were specifically placed in Spanish-speaking concentrated markets in Arizona, California, Florida, New Mexico, and Texas.
Kars crafted ads to tug at donors’ heartstrings and boost contributions, with little regard for truth or accuracy.
More than 84,000 people donated their vehicles to Kars, but only $126,815 of the more than $45.5 million that Kars raised was used to provide breast cancer screenings.
Defendants knew or should have known their breast cancer claims were deceptive, yet used them because they drove donations, according to the complaint.
In 2019, Irwin told UBCF’s CEO he only needed the ‘disease’ to make money. UBCF was their most lucrative client, generating 70–90% of annual revenue.
Kars faces $3.9 million judgment
Kars’ scheme violated Section 5 of the FTC Act and state laws on charitable solicitations and deceptive practices.
“Instead of using the funds to help those in need of breast cancer screenings, Kars engaged in a deceptive cancer charity fundraising scheme – a scheme that deliberately misled the public, exploited compassion, and diverted charitable donations to enrich themselves,” said Bonta.
The proposed settlement order imposes the following restrictions:
- Irwin: Permanently banned from fundraising and barred from false marketing claims.
- Frank: Prohibited from misrepresentations in fundraising or marketing.
- Kars and affiliates: Barred from deceptive fundraising or marketing practices.
- Kars and Frank: Must substantiate all fundraising and marketing claims.
Irwin, Frank, and Kars face a $3.9 million judgment, partially suspended due to inability to pay in full.
If Kars, Frank, or Irwin are found to have misrepresented their finances, the full judgment becomes immediately due.
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