People's Choice Charities, Inc.

Agency: California Attorney General (CA AG)
Description:

On December 1, 2015, the California Attorney General along with two local District Attorneys, filed a lawsuit against People's Choice Charities ("PCC") a car donation charity for violating state law by misrepresenting their charitable program and improperly profiting from supposedly charitable activities. Car donation organizations are 501(c)(3) tax-exempt organizations that solicit car donations, sell the vehicles, deduct all their costs, and then use what is left to fund a charitable program. PCC claimed that 100% of the net proceeds from the sale of donated cars would go to the donor's chosen charities. The lawsuit alleges 97% of the donations were spend on administrative costs, such as towing and car repairs, and advertising. PCC claimed that towing was free, and that PCC employs experienced staff to repair and sell the cars at minimal cost. In reality, PCC charges the charities for towing expenses and has no repair staff; instead they pay outside vendors hundreds of thousands of dollars to do this work. After PCC deducts its numerous and undisclosed expenses, only a tiny fraction of the vehicle's sale price is forwarded to the donor's chosen nonprofit. According to audits conducted by the Attorney General's office, from 2007 to 2012, PCC reported that it had donated over $700,000 to other nonprofits, while actually only donating $174,000. The lawsuit further alleges PCC developed a cash donation, effectively transforming a charitable organization into an unlicensed used car dealership in violation of state law. 

The lawsuit was filed in Los Angeles County Superior Court on December 1, 2015. It seeks a permanent injunction as well as more than $3 million in damages. This matter is currently pending.