10 ms·

CVS sued over ‘fraudulent’ donations to American Diabetes Association

149 points by stefan_ 4y ago

vageli 4y ago
Archive.org link: https://web.archive.org/web/20221205155718/https://lawstreetmedia.com/news/health/cvs-sued-over-fraudulent-donations-to-american-diabetes-association/ https://web.archive.org/web/20221205155718/https://lawstreet...
DHPersonal 4y ago
Here’s a summary from Reuters: https://www.reuters.com/article/us-cvs-lawsuit-idUSKBN1YL1UW https://www.reuters.com/article/us-cvs-lawsuit-idUSKBN1YL1UW Edit: Never mind, this is a different lawsuit.
- etchalon 4y ago
  This looks to be a completely different case.
  - DHPersonal 4y ago
    Oh, sorry! I thought I had picked the right one.
- vageli 4y ago
  That is a different case. The OP is about CVS using in-store customer donations to satisfy a legal obligation they had to ADA. > CVS did not merely collect customers’ Campaign Donations and forward them to the ADA, but, instead, counted Campaign Donations toward the satisfaction of a legally binding obligation, which CVS had made to the ADA, to donate $10 million to the ADA during the threeyear period of 2021 through 2023 (the “CVS Obligation”) Court filing here: https://www.docketalarm.com/cases/New_York_Eastern_District_Court/1--22-cv-03116/McCabe_v._CVS_Health_Corporation/1/ https://www.docketalarm.com/cases/New_York_Eastern_District_...
- deleted 4y ago
  [deleted]
hirundo 4y ago
I now routinely get solicited for donations by point-of-sale devices, and routinely skip them. (I have yet to get a glare or any other reaction from a clerk for doing this.) My rationalization is that I do not trust an unknown random charity to serve their stated purpose with my donation. I didn't even consider that the store could be corrupt, reimbursing themselves for their own donation. When I skip a random donation I think, hey, I'll just bundle up these little rejections and make a real donation to an organization that I do trust. But I don't keep score. Given the increasing number of these soliciations I may be underpaying this promise.
- thaumasiotes 4y ago
  > Given the increasing number of these soliciations I may be underpaying this promise. This implies that the more often people ask you to donate money to charity, the more money you are obligated to donate to charity. Do you really believe this?
  - hirundo 4y ago
    No. I believe that I could do more good by donating more, and hijack these requests as prompts to do that. It's just a motivational hack rather than erasing red from my ledger.
- scrose 4y ago
  > I didn't even consider that the store could be corrupt, reimbursing themselves for their own donation. I would very much like to be wrong, but I’m pretty sure that’s what they’re all doing in some way. — Although, I really hope someone will prove me wrong in the comments. AFAIK if you donate to a non-profit through the pos terminals, it counts as a tax deductible donation that the organization with the terminal can claim, not you. For example if you donate $10 to the ASPCA through a Petsmart terminal, thats a tax deductible contribution for Petsmart from money out of your pocket.
  - willcipriano 4y ago
    Its also $10 of taxable income to Petsmart, net canceling it all out.
jasode 4y ago
This essence of the CVS misbehavior: >According to the complaint, prior to the completion of a customer’s transaction, the checkout screen would prompt the customer with several boxes of pre-selected amounts (and an opt out option) to donate to the American Diabetes Association (ADA). The plaintiff alleges that CVS did not merely collect the customer’s donations and forward them to the ADA, but instead, counted the donations toward a legally binding obligation of $10 million that CVS had made to the ADA. If the complaint is ultimately proven true, it contradicts a Lifehacker March 2021 story[1] saying that doesn't happen : >Case in point: A tweet with erroneous information went viral last week, claiming that participating grocery stores have already handed out donations to nonprofit partners for a tax write off, and are merely collecting customer money as a reimbursement. The donation, according to the tweet, is merely a ruse for the sake of profiteering under the guise of charity. (The LifeHacker article was before ChatGPT so we can't blame A.I. generated nonsense in this case.) EDIT to replies about the sequence of donate-then-collect vs collect-then-donate: I don't believe this is actually a big difference in terms of the spirit of the donation from the perspective of the consumer. If one reads the splashy PR releases from CVS about the $10 million donation : - https://www.cvshealth.com/news-and-insights/press-releases/cvs-health-announces-10-million-commitment-to-the-american https://www.cvshealth.com/news-and-insights/press-releases/c... - https://diabetes.org/newsroom/press-releases/2021/10-million-commitment-to-american-diabetes-association-by-cvs-health-reach-5-million-patients-transform-overall-health-outcome https://diabetes.org/newsroom/press-releases/2021/10-million... ... CVS wants the positive associations with that $10 million donation. The unstated implication is that CVS will pay $10 million out of their profits. Normal readers would not expect that self-congratulatory press release to mean they will actually add donation prompts at the checkout so it will be the customers paying that $10 million donation. The public would think it feels like the deception in the LifeHacker article even if the sequence actions of collect-then-donate is reversed. [1] https://lifehacker.com/check-out-donations-arent-a-scam-actually-1846432598 https://lifehacker.com/check-out-donations-arent-a-scam-actu...
- thaumasiotes 4y ago
  Those two paragraphs don't contradict each other. You can have CVS collecting money, disbursing money to the ADA, and counting the money it disburses toward its legal obligation to give money to the ADA, all in that order. The Lifehacker story says it's not disbursing the money first and collecting it second.
radicaldreamer 4y ago
Another reason chains do this is to see if customers have extra disposable income in that locale so they can raise prices on items there. This is the same reason you’ll see this at grocery stores.
- cjbgkagh 4y ago
  Yeah, this is the real reason they do this even though they know it annoys you. It is a very strong signal of price sensitivity, it’s because they can’t ask “do you feel like you still have money left over” after each purchase. Somewhere some data scientist made the world more annoying. Similar to how they figured they could make more money by putting milk in the back of the store.
  - winReInstall 4y ago
    The whole thing is designed as psychology journey. First buy veggies to ease your conciousness, then but sweets and vine.
  - Zigurd 4y ago
    And this is why seemingly innocuous things need to be regulated. Culture hacking for profit isn't dumping mercury in the water supply, but the dark patterns degrade the environment as if they were poison. You can't fix or regulate all of it, but doing what is practical, to disadvantage predatory commercialism, can add up to a huge benefit to society.
- echelon 4y ago
  Wow, this is eye-opening. What a scummy tactic. Do they also claim tax write-offs for your donations?
  - PuppyTailWags 4y ago
    Of course
  - mehlmao 4y ago
    I donate $5 at Publix. Publix's income (and tax responsibility) increases by $5. They donate my (and everybody else's) $5. Their income (and tax responsibility) decreases by $5 to the original level.
projektfu 4y ago
I have never liked these donations at the register. The corporation will claim all credit for the donation and spend no money. (Note that I’m not talking about the tax treatment.)
- hackernewds 4y ago
  The tax treatment is a significant benefit no?
  - projektfu 4y ago
    It is unclear, at least, whether the company can claim a tax benefit on additional money paid over the income from the sale. Generally these things are treated as liabilities (like sales tax) instead of income. Even if they did, they would have to count that money as income and then deduct it from the taxable income, which would be a wash, assuming their accounting is above-board. On the other hand, they may have some sleight of hand that allows them to do so. This would be a pretty big deal. Supposedly, register donations account for over $450 million in donations to charity each year. [1] (Again, not sure how that's calculated). There could be upwards of $150 million in unpaid taxes. 1. https://engageforgood.com/ccc-2019/ https://engageforgood.com/ccc-2019/, referenced by [2] 2. https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-those-checkout-donations-0 https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-...
    - luhn 4y ago
      From your own link: > This is where you round up your bill to give to a charity designated by the retailer, and the donation amount appears on your receipt. The store serves only as a collection agent for your gift. Assuming the business is following the law, it will not include your donation as part of its business receipts, or income, nor will it claim the charitable gift as an expense.
      - projektfu 4y ago
        Yes… that is the rule as we understand it. I don’t know what is actually happening behind the scenes. Do you have the details of how this is handled in a specific company? After all, the rules said that Enron can’t hide liabilities in special purpose vehicles just to make their profits look larger. And yet, they got away for a long time not following the rule, despite being audited by a big 5 firm. This CVS thing suggests that companies may be doing something other than putting the money into a liability account and then handing that off as a donation “from their customers”. What else might be possible?
user3939382 4y ago
I figured they're doing this to create a tax deduction for themselves, but I have no idea how the tax laws work in this case (proxied charitable contributions) or if that's possible.
Waterluvian 4y ago
It seems to create a double dipping situation where the customer thinks they can deduct it, while CVS is also deducting it.
- butlerm 4y ago
  According to this source, posted earlier, CVS would only be a collection agent and could not claim special tax treatment for passing through the charitable contributions of others: "This is where you round up your bill to give to a charity designated by the retailer, and the donation amount appears on your receipt. The store serves only as a collection agent for your gift. Assuming the business is following the law, it will not include your donation as part of its business receipts, or income, nor will it claim the charitable gift as an expense. In other words, your gift has zero impact on the store’s income taxes." https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-those-checkout-donations-0 https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-...
6LLvveMx2koXfwn 4y ago
Yet another reason to switch to git.
- arcticbull 4y ago
  Agreed this seems like a major subversion of the rules.
  - Sohcahtoa82 4y ago
    Definitely a ClearCase of fraud.
    - tclancy 4y ago
      Lock them in the Vault.
soderfoo 4y ago
>CVS did not merely collect customers’ Campaign Donations and forward them to the ADA, but, instead, counted Campaign Donations toward the satisfaction of a legally binding obligation, which CVS had made to the ADA, to donate $10 million to the ADA during the three- year period of 2021 through 2023 (the “CVS Obligation”). Keeping the in mind a complaint is one party's very subjective factual narrative, the "legally binding obligation to donate" jumps out for me. Does this plaintiff know the agreement's specifics? If it were, let's say, an agreement that CVS would donate $n over x years (matching customer donations) and in exchange they were promoted as an A.D.A. sponsor, and had permission to use the A.D.A. logo for marketing purposes, I don't find it terribly egregious.
- asdajksah2123 4y ago
  As far as I understand the case is about what a customer donating to the ADA through the CVS system would reasonably expect to happen, vs. what happened. It doesn't matter what the agreement with the ADA is. What matters is what the customer would expect based on what CVS was presenting to them and what happened. So, consider 2 scenarios: 1. CVS collects $1mm from its customers for the ADA donations. The customers' expectations would be that the ADA would get $11mm. $10mm for CVS's legally binding payment, and the $1mm they donated through CVS. So the customers are short $1mm, and CVS is short $10mm. 2. This suit is claiming that the ADA still receives $10mm. The customer is short $1mm, but CVS is only short $9mm. Irrespective of what CVS's agreement with the ADA is it sounds like a reasonable person can legitimately claim that #2 led to a donation to CVS, and not the ADA, and so CVS's representation was fraudulent. Of course, money is fungible, so this is likely hard to prove. But the case seems like a fairly reasonable one on the surface.
  - DangitBobby 4y ago
    It doesn't seem reasonable to me. If I were CVS and lost this case court, I would simply never guarantee any amount of charitable giving again. Then the ADA doesn't have generous backer guaranteeing a 3 year budget of $10M, which is almost certainly not good for the ADA. It seems incredibly short sighted to sue a company for charitable fundraising/giving unless they obviously intended to defraud.
arcticbull 4y ago
Friendly reminder that CVS also owns Aetna.
- nickjj 4y ago
  I never knew that. Do you have any feedback about Aetna? If anyone is curious, they are a big medical insurance company in the US.
samhuk 4y ago
I have honestly never understood why we allow businesses to use customers for charitable causes. It seems like a huge conflict of interest and essentially co-mingles for-profit and none-profit legal entities. It reminds me of when I worked at a large financial institution that most have heard of that has their tax audit subfirm next-door to their tax consultation subfirm, then promises the government "they definitely aren't doing shady things". If businesses want to support a charitable cause, why can't they support it? I don't understand how it became normal to mix buying a burger at Mcdonalds with donating to their somewhat shady charity? This all leads me to the inevitable tin-foil-hat conspiracy that they deliberately exploit this (IMHO) very strange legal void in order to gauge customer price sensitivity and such, as one other comment pointed out. I suppose if the company directly donated to charity, then they would raise prices to account for that, and then in the end the customer is still donating to charity. So at the end of the day, perhaps I'm just somewhat against for-profit businesses participating in none-profit activities. Is there a better way? I'm not going against charity in general, not at all and quite the opposite, but rather just very confused how we, society, and the law in general have allowed businesses to access their customers for charitable donations. Am I missing something? Genuinely open to ideas.
- jpk 4y ago
  AFAIK, it's all about tax deductions. If a company gives to a charity, they can write it off, but they'd rather someone else foot the bill for the giving. So by presenting the option to round up your purchases or whatever, they give you the opportunity to essentially pay part of their taxes for them. So in general, if I want to give to a charity, I give directly and claim the deduction myself unless the company is matching or something.
  - UncleMeat 4y ago
    This is not how it works. Businesses pay taxes on profits, not revenue. If a business donates money to charity or makes a big pile of cash and lights in on fire, both reduce profit and therefore tax burden. If a business collects $10 from people and then donates that $10 to charity the net effect on their taxes is exactly zero.
deleted 4y ago
[deleted]
subsubzero 4y ago
And this is why I never "tack on" those extra dollars to $X charitable cause on seemingly every POS system that retailers use. They take your money and use it to offset their tax liability(by saying the donation is from them not you). You do not get any tax breaks from making the donation and who knows if it is even going to said charity. If you want to donate to a charity, reach out to the charity directly and don't uses some sketchy middleman who is siphoning your money to who knows what.
- deleted 4y ago
  [deleted]
nickff 4y ago
Here is a link to the CVS Health site about the arrangement: https://www.cvshealth.com/social-responsibility/our-giving/national-partnerships/american-diabetes-association https://www.cvshealth.com/social-responsibility/our-giving/n... Here is a link to the ADA webpage about the announcement: https://diabetes.org/newsroom/press-releases/2021/10-million-commitment-to-american-diabetes-association-by-cvs-health-reach-5-million-patients-transform-overall-health-outcome https://diabetes.org/newsroom/press-releases/2021/10-million... It seems like CVS said they would donate 10MM to the ADA, and is satisfying that arrangement by collecting money from customers and other donors. I am unsure as to whether this is 'normal', and it definitely seems unsavory, but it's not clearly illegal. It also seems like this sort of fundraising would be very useful to the ADA, as it helps them raise money from donors they would otherwise have trouble getting in front of.
- matthewdgreen 4y ago
  This is a situation where the typical consumer has asymmetric resources and time pressure (they’re paying quickly at a retail checkout), and hence have limited opportunity to hunt around CVS’s website to figure out whether CVS is doing the plain-language reasonable thing or has cobbled together some alternative arrangement. Obviously IANAL but I think in these situations firms should clearly disclose to consumers at the time of donation what’s happening. “The plans were clearly displayed in the locked basement of the local planning office” shouldn’t be a viable alternative. More generally: this is a case where government regulation is very helpful. There is a clear public interest in consumers’ ability to trust that retailers are being honest and forthright about “we donate to charity on your behalf” claims. I know many people who refuse to donate to these schemes because they don’t trust the retailer, which seems harmful all around. ETA: I read your first link carefully and I don’t even think it discloses anything. It says there is a $10m commitment and later says customers will be invited to donate. It doesn’t make clear that one will be counted towards the other.
christkv 4y ago
CVS we promise to donate 10 million dollars of our customers money now please say thank you.
lcnPylGDnU4H9OF 4y ago
I see these donation requests at many places when I check out in the US. For example, PetCo will ask if you would "like to donate to save pets lives" and it seems reasonable to assume that they treat the donation in a similar fashion to CVS in this case. That's not to say that this isn't fraudulent, just pointing out that this seems to be a very common practice. Never once have I believed that I would be donating directly to the charity (this is despite the phrasing rather than because of it) and, indeed, it seems much more like I am simply increasing the amount of my transaction in order to get [the retailer] to agree to donate the amount of the increase to charity. Given that context, I've never once considered following through; if anything I would ask the cashier, "Which charity is it?" so I can just donate myself. I believe at least one benefit of this for the retailer is the ability to claim this (not technically a) "donation" as revenue, which they then actually donate for the tax benefit. Of course they want the consumer to spend an extra (up to) $1 so the retailer 1) gets that as additional revenue and 2) avoids paying taxes on this revenue. It's nice to see this being called out in a class-action suit; hopefully something comes of it.

149 points by stefan_ 4y ago

Archive.org link: https://web.archive.org/web/20221205155718/https://lawstreetmedia.com/news/health/cvs-sued-over-fraudulent-donations-to-american-diabetes-association/ https://web.archive.org/web/20221205155718/https://lawstreet...

DHPersonal 4y ago

Here’s a summary from Reuters: https://www.reuters.com/article/us-cvs-lawsuit-idUSKBN1YL1UW https://www.reuters.com/article/us-cvs-lawsuit-idUSKBN1YL1UW Edit: Never mind, this is a different lawsuit.

etchalon 4y ago
This looks to be a completely different case.
- DHPersonal 4y ago
  Oh, sorry! I thought I had picked the right one.
vageli 4y ago
That is a different case. The OP is about CVS using in-store customer donations to satisfy a legal obligation they had to ADA. > CVS did not merely collect customers’ Campaign Donations and forward them to the ADA, but, instead, counted Campaign Donations toward the satisfaction of a legally binding obligation, which CVS had made to the ADA, to donate $10 million to the ADA during the threeyear period of 2021 through 2023 (the “CVS Obligation”) Court filing here: https://www.docketalarm.com/cases/New_York_Eastern_District_Court/1--22-cv-03116/McCabe_v._CVS_Health_Corporation/1/ https://www.docketalarm.com/cases/New_York_Eastern_District_...
deleted 4y ago
[deleted]

hirundo 4y ago

I now routinely get solicited for donations by point-of-sale devices, and routinely skip them. (I have yet to get a glare or any other reaction from a clerk for doing this.) My rationalization is that I do not trust an unknown random charity to serve their stated purpose with my donation. I didn't even consider that the store could be corrupt, reimbursing themselves for their own donation. When I skip a random donation I think, hey, I'll just bundle up these little rejections and make a real donation to an organization that I do trust. But I don't keep score. Given the increasing number of these soliciations I may be underpaying this promise.

thaumasiotes 4y ago
> Given the increasing number of these soliciations I may be underpaying this promise. This implies that the more often people ask you to donate money to charity, the more money you are obligated to donate to charity. Do you really believe this?
- hirundo 4y ago
  No. I believe that I could do more good by donating more, and hijack these requests as prompts to do that. It's just a motivational hack rather than erasing red from my ledger.
scrose 4y ago
> I didn't even consider that the store could be corrupt, reimbursing themselves for their own donation. I would very much like to be wrong, but I’m pretty sure that’s what they’re all doing in some way. — Although, I really hope someone will prove me wrong in the comments. AFAIK if you donate to a non-profit through the pos terminals, it counts as a tax deductible donation that the organization with the terminal can claim, not you. For example if you donate $10 to the ASPCA through a Petsmart terminal, thats a tax deductible contribution for Petsmart from money out of your pocket.
- willcipriano 4y ago
  Its also $10 of taxable income to Petsmart, net canceling it all out.

jasode 4y ago

This essence of the CVS misbehavior: >According to the complaint, prior to the completion of a customer’s transaction, the checkout screen would prompt the customer with several boxes of pre-selected amounts (and an opt out option) to donate to the American Diabetes Association (ADA). The plaintiff alleges that CVS did not merely collect the customer’s donations and forward them to the ADA, but instead, counted the donations toward a legally binding obligation of $10 million that CVS had made to the ADA. If the complaint is ultimately proven true, it contradicts a Lifehacker March 2021 story[1] saying that doesn't happen : >Case in point: A tweet with erroneous information went viral last week, claiming that participating grocery stores have already handed out donations to nonprofit partners for a tax write off, and are merely collecting customer money as a reimbursement. The donation, according to the tweet, is merely a ruse for the sake of profiteering under the guise of charity. (The LifeHacker article was before ChatGPT so we can't blame A.I. generated nonsense in this case.) EDIT to replies about the sequence of donate-then-collect vs collect-then-donate: I don't believe this is actually a big difference in terms of the spirit of the donation from the perspective of the consumer. If one reads the splashy PR releases from CVS about the $10 million donation : - https://www.cvshealth.com/news-and-insights/press-releases/cvs-health-announces-10-million-commitment-to-the-american https://www.cvshealth.com/news-and-insights/press-releases/c... - https://diabetes.org/newsroom/press-releases/2021/10-million-commitment-to-american-diabetes-association-by-cvs-health-reach-5-million-patients-transform-overall-health-outcome https://diabetes.org/newsroom/press-releases/2021/10-million... ... CVS wants the positive associations with that $10 million donation. The unstated implication is that CVS will pay $10 million out of their profits. Normal readers would not expect that self-congratulatory press release to mean they will actually add donation prompts at the checkout so it will be the customers paying that $10 million donation. The public would think it feels like the deception in the LifeHacker article even if the sequence actions of collect-then-donate is reversed. [1] https://lifehacker.com/check-out-donations-arent-a-scam-actually-1846432598 https://lifehacker.com/check-out-donations-arent-a-scam-actu...

thaumasiotes 4y ago
Those two paragraphs don't contradict each other. You can have CVS collecting money, disbursing money to the ADA, and counting the money it disburses toward its legal obligation to give money to the ADA, all in that order. The Lifehacker story says it's not disbursing the money first and collecting it second.

radicaldreamer 4y ago

Another reason chains do this is to see if customers have extra disposable income in that locale so they can raise prices on items there. This is the same reason you’ll see this at grocery stores.

cjbgkagh 4y ago
Yeah, this is the real reason they do this even though they know it annoys you. It is a very strong signal of price sensitivity, it’s because they can’t ask “do you feel like you still have money left over” after each purchase. Somewhere some data scientist made the world more annoying. Similar to how they figured they could make more money by putting milk in the back of the store.
- winReInstall 4y ago
  The whole thing is designed as psychology journey. First buy veggies to ease your conciousness, then but sweets and vine.
- Zigurd 4y ago
  And this is why seemingly innocuous things need to be regulated. Culture hacking for profit isn't dumping mercury in the water supply, but the dark patterns degrade the environment as if they were poison. You can't fix or regulate all of it, but doing what is practical, to disadvantage predatory commercialism, can add up to a huge benefit to society.
echelon 4y ago
Wow, this is eye-opening. What a scummy tactic. Do they also claim tax write-offs for your donations?
- PuppyTailWags 4y ago
  Of course
- mehlmao 4y ago
  I donate $5 at Publix. Publix's income (and tax responsibility) increases by $5. They donate my (and everybody else's) $5. Their income (and tax responsibility) decreases by $5 to the original level.

projektfu 4y ago

I have never liked these donations at the register. The corporation will claim all credit for the donation and spend no money. (Note that I’m not talking about the tax treatment.)

hackernewds 4y ago
The tax treatment is a significant benefit no?
- projektfu 4y ago
  It is unclear, at least, whether the company can claim a tax benefit on additional money paid over the income from the sale. Generally these things are treated as liabilities (like sales tax) instead of income. Even if they did, they would have to count that money as income and then deduct it from the taxable income, which would be a wash, assuming their accounting is above-board. On the other hand, they may have some sleight of hand that allows them to do so. This would be a pretty big deal. Supposedly, register donations account for over $450 million in donations to charity each year. [1] (Again, not sure how that's calculated). There could be upwards of $150 million in unpaid taxes. 1. https://engageforgood.com/ccc-2019/ https://engageforgood.com/ccc-2019/, referenced by [2] 2. https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-those-checkout-donations-0 https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-...
  - luhn 4y ago
    From your own link: > This is where you round up your bill to give to a charity designated by the retailer, and the donation amount appears on your receipt. The store serves only as a collection agent for your gift. Assuming the business is following the law, it will not include your donation as part of its business receipts, or income, nor will it claim the charitable gift as an expense.
    - projektfu 4y ago
      Yes… that is the rule as we understand it. I don’t know what is actually happening behind the scenes. Do you have the details of how this is handled in a specific company? After all, the rules said that Enron can’t hide liabilities in special purpose vehicles just to make their profits look larger. And yet, they got away for a long time not following the rule, despite being audited by a big 5 firm. This CVS thing suggests that companies may be doing something other than putting the money into a liability account and then handing that off as a donation “from their customers”. What else might be possible?

user3939382 4y ago

I figured they're doing this to create a tax deduction for themselves, but I have no idea how the tax laws work in this case (proxied charitable contributions) or if that's possible.

Waterluvian 4y ago

It seems to create a double dipping situation where the customer thinks they can deduct it, while CVS is also deducting it.

butlerm 4y ago
According to this source, posted earlier, CVS would only be a collection agent and could not claim special tax treatment for passing through the charitable contributions of others: "This is where you round up your bill to give to a charity designated by the retailer, and the donation amount appears on your receipt. The store serves only as a collection agent for your gift. Assuming the business is following the law, it will not include your donation as part of its business receipts, or income, nor will it claim the charitable gift as an expense. In other words, your gift has zero impact on the store’s income taxes." https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-those-checkout-donations-0 https://www.taxpolicycenter.org/taxvox/who-gets-tax-benefit-...

6LLvveMx2koXfwn 4y ago

Yet another reason to switch to git.

arcticbull 4y ago
Agreed this seems like a major subversion of the rules.
- Sohcahtoa82 4y ago
  Definitely a ClearCase of fraud.
  - tclancy 4y ago
    Lock them in the Vault.

soderfoo 4y ago

>CVS did not merely collect customers’ Campaign Donations and forward them to the ADA, but, instead, counted Campaign Donations toward the satisfaction of a legally binding obligation, which CVS had made to the ADA, to donate $10 million to the ADA during the three- year period of 2021 through 2023 (the “CVS Obligation”). Keeping the in mind a complaint is one party's very subjective factual narrative, the "legally binding obligation to donate" jumps out for me. Does this plaintiff know the agreement's specifics? If it were, let's say, an agreement that CVS would donate $n over x years (matching customer donations) and in exchange they were promoted as an A.D.A. sponsor, and had permission to use the A.D.A. logo for marketing purposes, I don't find it terribly egregious.

asdajksah2123 4y ago
As far as I understand the case is about what a customer donating to the ADA through the CVS system would reasonably expect to happen, vs. what happened. It doesn't matter what the agreement with the ADA is. What matters is what the customer would expect based on what CVS was presenting to them and what happened. So, consider 2 scenarios: 1. CVS collects $1mm from its customers for the ADA donations. The customers' expectations would be that the ADA would get $11mm. $10mm for CVS's legally binding payment, and the $1mm they donated through CVS. So the customers are short $1mm, and CVS is short $10mm. 2. This suit is claiming that the ADA still receives $10mm. The customer is short $1mm, but CVS is only short $9mm. Irrespective of what CVS's agreement with the ADA is it sounds like a reasonable person can legitimately claim that #2 led to a donation to CVS, and not the ADA, and so CVS's representation was fraudulent. Of course, money is fungible, so this is likely hard to prove. But the case seems like a fairly reasonable one on the surface.
- DangitBobby 4y ago
  It doesn't seem reasonable to me. If I were CVS and lost this case court, I would simply never guarantee any amount of charitable giving again. Then the ADA doesn't have generous backer guaranteeing a 3 year budget of $10M, which is almost certainly not good for the ADA. It seems incredibly short sighted to sue a company for charitable fundraising/giving unless they obviously intended to defraud.

arcticbull 4y ago

Friendly reminder that CVS also owns Aetna.

nickjj 4y ago
I never knew that. Do you have any feedback about Aetna? If anyone is curious, they are a big medical insurance company in the US.

samhuk 4y ago

I have honestly never understood why we allow businesses to use customers for charitable causes. It seems like a huge conflict of interest and essentially co-mingles for-profit and none-profit legal entities. It reminds me of when I worked at a large financial institution that most have heard of that has their tax audit subfirm next-door to their tax consultation subfirm, then promises the government "they definitely aren't doing shady things". If businesses want to support a charitable cause, why can't they support it? I don't understand how it became normal to mix buying a burger at Mcdonalds with donating to their somewhat shady charity? This all leads me to the inevitable tin-foil-hat conspiracy that they deliberately exploit this (IMHO) very strange legal void in order to gauge customer price sensitivity and such, as one other comment pointed out. I suppose if the company directly donated to charity, then they would raise prices to account for that, and then in the end the customer is still donating to charity. So at the end of the day, perhaps I'm just somewhat against for-profit businesses participating in none-profit activities. Is there a better way? I'm not going against charity in general, not at all and quite the opposite, but rather just very confused how we, society, and the law in general have allowed businesses to access their customers for charitable donations. Am I missing something? Genuinely open to ideas.

jpk 4y ago
AFAIK, it's all about tax deductions. If a company gives to a charity, they can write it off, but they'd rather someone else foot the bill for the giving. So by presenting the option to round up your purchases or whatever, they give you the opportunity to essentially pay part of their taxes for them. So in general, if I want to give to a charity, I give directly and claim the deduction myself unless the company is matching or something.
- UncleMeat 4y ago
  This is not how it works. Businesses pay taxes on profits, not revenue. If a business donates money to charity or makes a big pile of cash and lights in on fire, both reduce profit and therefore tax burden. If a business collects $10 from people and then donates that $10 to charity the net effect on their taxes is exactly zero.

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subsubzero 4y ago

And this is why I never "tack on" those extra dollars to $X charitable cause on seemingly every POS system that retailers use. They take your money and use it to offset their tax liability(by saying the donation is from them not you). You do not get any tax breaks from making the donation and who knows if it is even going to said charity. If you want to donate to a charity, reach out to the charity directly and don't uses some sketchy middleman who is siphoning your money to who knows what.

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nickff 4y ago

Here is a link to the CVS Health site about the arrangement: https://www.cvshealth.com/social-responsibility/our-giving/national-partnerships/american-diabetes-association https://www.cvshealth.com/social-responsibility/our-giving/n... Here is a link to the ADA webpage about the announcement: https://diabetes.org/newsroom/press-releases/2021/10-million-commitment-to-american-diabetes-association-by-cvs-health-reach-5-million-patients-transform-overall-health-outcome https://diabetes.org/newsroom/press-releases/2021/10-million... It seems like CVS said they would donate 10MM to the ADA, and is satisfying that arrangement by collecting money from customers and other donors. I am unsure as to whether this is 'normal', and it definitely seems unsavory, but it's not clearly illegal. It also seems like this sort of fundraising would be very useful to the ADA, as it helps them raise money from donors they would otherwise have trouble getting in front of.

matthewdgreen 4y ago
This is a situation where the typical consumer has asymmetric resources and time pressure (they’re paying quickly at a retail checkout), and hence have limited opportunity to hunt around CVS’s website to figure out whether CVS is doing the plain-language reasonable thing or has cobbled together some alternative arrangement. Obviously IANAL but I think in these situations firms should clearly disclose to consumers at the time of donation what’s happening. “The plans were clearly displayed in the locked basement of the local planning office” shouldn’t be a viable alternative. More generally: this is a case where government regulation is very helpful. There is a clear public interest in consumers’ ability to trust that retailers are being honest and forthright about “we donate to charity on your behalf” claims. I know many people who refuse to donate to these schemes because they don’t trust the retailer, which seems harmful all around. ETA: I read your first link carefully and I don’t even think it discloses anything. It says there is a $10m commitment and later says customers will be invited to donate. It doesn’t make clear that one will be counted towards the other.

christkv 4y ago

CVS we promise to donate 10 million dollars of our customers money now please say thank you.

lcnPylGDnU4H9OF 4y ago

I see these donation requests at many places when I check out in the US. For example, PetCo will ask if you would "like to donate to save pets lives" and it seems reasonable to assume that they treat the donation in a similar fashion to CVS in this case. That's not to say that this isn't fraudulent, just pointing out that this seems to be a very common practice. Never once have I believed that I would be donating directly to the charity (this is despite the phrasing rather than because of it) and, indeed, it seems much more like I am simply increasing the amount of my transaction in order to get [the retailer] to agree to donate the amount of the increase to charity. Given that context, I've never once considered following through; if anything I would ask the cashier, "Which charity is it?" so I can just donate myself. I believe at least one benefit of this for the retailer is the ability to claim this (not technically a) "donation" as revenue, which they then actually donate for the tax benefit. Of course they want the consumer to spend an extra (up to) $1 so the retailer 1) gets that as additional revenue and 2) avoids paying taxes on this revenue. It's nice to see this being called out in a class-action suit; hopefully something comes of it.