Court: Telemarketers not allowed to lie

? Telemarketers can be prosecuted for fraud if they deliberately mislead donors into wrongly believing most of their contribution will go to charity, the Supreme Court ruled Monday.

The 9-0 ruling makes it easier for states to go after private fund-raisers who solicit money for charity but keep most of it for themselves.

In the past, the high court has stressed that such soliciting is a form of free speech and cannot be tightly restricted by the government.

But the justices retreated somewhat from that view in Monday’s opinion and declared that “false and misleading representations” are not shielded by the First Amendment.

Lawyers on both sides of the case characterized the ruling as only a modest change in the law.

Charities had feared a ruling declaring as fraudulent any fund-raising operation that kept most of the money.

The decision revives a fraud charge in Illinois against a telemarketing firm that solicited money to help Vietnam War veterans but kept 85 percent of what was contributed.

VietNow, a charity whose stated mission is to help jobless, homeless or injured war veterans, employed the for-profit firm Telemarketing Associates to solicit money, and it agreed that it would receive only 15 percent of the contributions.

State prosecutors said the charity spent only a small percentage of its receipts on direct aid to veterans, so that only 3 percent of donations went to their intended purpose.

But the fraud charge focused only on the telemarketer, not the charity.

The Illinois state courts threw out the fraud charge on free-speech grounds, but the state’s attorney general appealed. The First Amendment should not be “transformed into a license for unscrupulous fund-raisers to defraud the public in the name of raising money for charity,” state prosecutors said.

The Supreme Court agreed Monday in Illinois vs. Telemarketing Associates.

“The First Amendment protects the right to engage in charitable solicitations, but it does not shield fraud,” Justice Ruth Bader Ginsburg said.

High fund-raising costs alone do not make for fraud, she said. Nor does the “bare failure to disclose” how much of the money will be kept by the solicitor amount to fraud, she said.

But solicitors can be prosecuted if they make “affirmative statements (that) are intentionally misleading,” she said.

In three separate rulings in the 1980s, the court struck down strict state regulations that prohibited operations by charitable fund-raisers that kept more than 35 percent of the donations for themselves.

Monday’s decision preserves those earlier rulings, but nonetheless says fund-raisers can be prosecuted if they go one step further and falsely claim that all or most of the donations will go to charity.