Connecticut Attorney General's Office
Press Release
Attorney General Wins $50,000 Award Against New York Clothing Bin Company For Deceiving Consumers
June 11, 2009
Judge Robert Satter reached his decision against American Recycling Technologies of East Northport, N.Y. after a trial in Hartford Superior Court. Blumenthal's office originally sued the company in 2004 on behalf of the Department of Consumer Protection (DCP).
In exchange for a relatively small, flat fee, American Recycling prominently displays logos of charitable and service organizations on its bins. The company, however, pays the groups less than 10 percent of the bins' proceeds, while earning a profit of about 30 percent.
The court ruled that American Recycling willfully deceived consumers by prominently displaying charitable and service organization logos on its boxes while failing to clearly state that it keeps most of the proceeds. It ordered the company to change its boxes to no longer mislead consumers.
Blumenthal said, "This victory imposes a significant fine -- $50,000 -- and stops American Recycling from reprehensible trickery. This company deceived consumers with clothing bins -- about 70 at a time -- that produced big profits and paltry charitable benefits. Out of $2.7 million in revenues over five years, less than 10 percent went to any charity. Clothing bin operators beware: you cannot give away gave away crumbs and keep the cake.
"New law strengthening notice rules means that consumers should more carefully read clothing bins before donating. Make sure that the bin owner is a charity, not a for-profit imposter. The message to clothing bin operators and contributors: gifts should go to assist the needy, not enrich the greedy."
A new statute approved by the legislature and signed by the governor requires lettering at least two inches high on clothing bins stating whether donations benefit charity or not. If the bin benefits charity, the box must name the organization and inform consumers they can contact DCP for more information. The new law also requires operators to receive permission from owners to place bins on their property.
American Recycling pays charitable and service organizations a flat fee -- $200 to $700 a year -- to display their logos on its bin.
The company took in $2.72 million from its Connecticut bins from 2002 to 2007. Of that, only $225,115 went to charities and service organizations displayed on the bins -- less than 10 percent. The company kept $827,179 as profit, about 30 percent.
As of 2004, the company had at least 73 drop boxes in Connecticut. They were in Ansonia, Darien, Derby, Greenwich, Middlebury, Milford, New Haven, Norwalk, Orange, Oxford, Seymour, Stamford, Trumbull, Farmington, Hamden, North Haven and Waterbury.
Charities and service organizations whose logos were displayed on the boxes at that time included: the Narcotics Enforcement Officers Association, Valley/Amity Safe Kids, Seymour Police Department Community Resource Program, St. Joseph's School, Trumbull Police Department and Darien Volunteer Fire Department.
The company still had 59 bins in the state in late 2008.