Supreme Court Deals Blow to Telemarketers

The U.S. Supreme Court has ruled that states can pursue telemarketers on fraud charges in some cases when they fail to disclose in their fundraising solicitations how much of the money they collect goes to charity, the Associated Press reported today.

The unanimous ruling allows the Illinois attorney general's office to press its suit against Telemarketing Associates, a company that kept 85 percent of the money it raised for Vietnam veterans charity Vietnow. The landmark ruling in the case, Madigan v. Telemarketing Associates, appears to contradict previous case law that barred states from requiring telemarketers to disclose how much fundraising money goes to the nonprofits for which they solicit donations.

Though the ruling falls short of requiring telemarketers to disclose this information, it sends the message that keeping quiet about high fundraising costs can fall into the realm of fraud when combined with deceptive language, according to the AP.

“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, according to the AP.

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