How Much Money Must You Give To Charity If You Induce People To "Donate"?

• Published date: 22 June 2022
• Law Firm: Frankfurt Kurnit Klein & Selz
• Author: Ms Terri Seligman

The headline on the homepage of the Omaze website says "Win [Something Great] and help [Worthy Cause]". You hit the enter button and go to a page describing the prize, the intended beneficiaries of the donation you'll make to enter and, if you keep scrolling, the "stuff our lawyers want you to read." In that section, if you keep scrolling, you'll find a section called Fundraising Transparency. There, you find out that although 100% of your donation goes to CAF America, Omaze's designated charity, of that amount, 85% will go back to Omaze to cover its "costs". In other words, [Worthy Cause] will get 15% of the entrants' donations.

That didn't sit too well with a group of consumers who used the Omaze website. They filed a putative class action suit in California district court, alleging that Omaze's marketing is deceptive and violates California law. Plaintiffs allege that Omaze misled them in two main ways: (1) by suggesting that most or all of the donated money would go to charity; and (2) by suggesting that Plaintiffs would be more likely to win prizes if they made donations than if they entered for free. They also allege that Omaze's charitable fundraising violates California law regulating raffles, sweepstakes, and lotteries, and "is just a front for illegal lotteries."

Defendant's motion to dismiss followed, which the Court granted in part and denied in part.

First, the Court addressed plaintiffs' allegation that...