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Minnesota sues thrift store chain over charity

Lawsuits and business disputes are not restricted to for-profit business activities in Minnesota. The state Attorney General, Lori Swanson, sued the international thrift store chain Savers in Henepin District Court on May 21. According to her charges, the chain is seriously misleading the public on the amount of its donated clothing and furniture proceeds that actually goes to charities.

The lawsuit alleges eight separate counts of charities law violations. The Attorney General said that Savers conceals its role as a for-profit fundraiser and that sales proceeds meant for one charity might go to another non-profit group.

The Attorney General claimed that the chain donates only a small fraction of the money made from selling used clothes to the charities. For example, the company pays only 40 cents per pound of donated clothing which ends up to be a few cents for a shirt that Savers sells for six dollars. The Attorney General also said that the chain donates nothing for non-clothing merchandise such as furniture.

In Minnesota, the store chain collects and sells used items for charitable organizations such as the Epilepsy Foundation and Vietnam Veterans of America. Three other charities ended their relationship with Savers after the attorney general issued a report in November accusing the stores and its partner charities of mishandling donations.

Savers is based in Bellevue Washington and claims that it is the largest retail thrift store chain in the United States and has $1 billion in annual sales. Two private equity groups and company executives own the chain. It operates around 15 stores in Minnesota such as Savers, Unique Thrift and Valu Thrift.

Savers CEO and president responded to the lawsuit with a statement that it has changed its practices in response to the attorney general's concerns. He claimed that the chain will vigorously defend the lawsuit which places its charitable funding at risk.

Minnesota imposes numerous requirements upon for-profit and non-profit businesses to prevent fraud and assure transparency in its dealings. Avoiding deceptive trade practices may require legal assistance and preparation.

Source: Star Tribune, "Minnesota attorney general sues Savers thrift store chain," By Jennifer Bjorhus, May 22, 2015

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