Minnesota's attorney general has filed a lawsuit against billion-dollar thrift store chain Savers, accusing it of misleading the public about the extent to which the clothes and items they donate will benefit charities.
The Star Tribune reports that a suit filed by Attorney General Lori Swanson accuses the nation's largest thrift store chain of concealing its identity as a for-profit fundraising company, and of soliciting donations in the name of charity but keeping most of the proceeds itself.
The suit says only a small fraction of the money from selling used clothing goes to charity, while none of the proceeds from household goods go to charity, the newspaper notes. Swanson claims Savers, which has 15 stores in Minnesota, has violated charities law on eight occasions.
"Savers has seriously misled the public about the extent to which donated clothes and merchandise benefit the for-profit retailer vs. the charity," she said, according to WDAY.
WDAY reports Savers sells donated clothing for a "hefty mark-up" over what it pays charities, in some cases a flat rate of just 40 cents for every pound of donated clothing.
For example, if Savers sells a pound of clothing that was donated by a charity for $100, the charity may only get 40 cents, while Savers keeps $99.60.
FOX 9 notes the Attorney General's office also found that donors at its Columbia Heights store were told the location benefitted the Epilepsy Foundation of Minnesota and the Disabled American Veterans – when donations at the store were only made to the latter.
In November, Swanson released the results from a year-long investigation into the chain and its relationships with local charities, including the Vietnam Veterans of America, Courage Kenny Foundation and the Lupus Foundation.
She said Savers was deceiving customers by not disclosing how much of a donation goes to charity and how much the for-profit keeps. She also said donations to various charities were often mixed together, so someone donating an item to a specific charity had no idea whether it will actually benefit from it.
Several Minnesota nonprofits severed their ties with Savers following the AG's compliance report.
In response to the Business Journal, Savers President and CEO Ken Alterman said: "We are disappointed by the decision of the Minnesota attorney general’s office to take this action because we have made multiple attempts to work collaboratively on a resolution that benefits everyone involved.
"Since the AG’s office filed its Compliance Report, our company has worked diligently to answer every question that was raised and have begun implementing operational changes to address the AG’s concerns."