Group Questions Cellphone Fund-Raising

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The New York Times

A new program that lets cellphone users send text messages to donate to the American Red Cross in major natural disasters has come under fire by a consumer group that contends the program is a business development strategy masquerading as charity.

”The wireless industry has made a very direct appeal here to the hearts of Americans to use these short codes to make charitable donations, but people don’t realize that every short code comes with a bill,” Jamie Court, president of the group, the Foundation for Taxpayer and Consumer Rights, said about the five-digit codes used to send text messages.

The program, Text 2Help, was first used after Hurricane Katrina, and was promoted last month at a wireless industry trade show. It enables customers of participating wireless companies to enter the code 24357, or 2HELP, to make $5 donations to the Red Cross in natural disasters. Donations are added to monthly cellphone statements or debited from prepaid accounts.

What rankles the consumer group is that each donation is capped at $5 and will incur standard text-messaging fees, which on AT&T are 15 cents. ”If you want to contribute $20, you have to send four text messages and you’ll be billed for four text messages,” Mr. Court said. ”These contributions are structured
so that consumers who want to give more pay a higher price for doing so.”

David S. Diggs, executive director of the Wireless Foundation, a charity created by the wireless industry, said antitrust concerns prevented the carriers from waiving their service fees. ”One of the considerations in a trade organization is that we cannot discuss matters of pricing,” Mr. Diggs said.” And even though it might be nice if we could all do this for free, that is agreeing on a price.”

He said at least one company was contributing its fees for the donations using Text 2Help, though he declined to identify it.

Mr. Diggs said the $5 limit was established after consultations with the Red Cross. ”Collectively, both we and the Red Cross decided that a low figure like that would facilitate impulse donations,” he said. ”It is a sort of an electronic stand-in for passing the bucket.”

The Red Cross raised more than $100,000 through the system for victims of Hurricane Katrina, said Joshua Kittner, a spokesman. ”We would like to stress that any and all ways of making the donation process simple and easy is very welcome, and every donation we receive is important and helps no matter the amount,” Mr. Kittner said in an e-mail message.

Mr. Diggs said that though the amount was modest, the cellphone industry expected its role in charitable fund-raising to grow. The Red Cross raised more than $2 billion for victims of Hurricane Katrina.

The Foundation for Taxpayer and Consumer Rights has sent a letter about the program to former Presidents George Bush and Bill Clinton, who raised money for Hurricane Katrina victims and who were keynote speakers at the trade show, asking them to urge the companies to waive the fees.

The letter also questions whether the companies in the program — AT&T, Alltel, Boost Mobile, Sprint Nextel, T-Mobile, Verizon Wireless and the Dobson Communications Corporation — are taking tax deductions for participating.

Jay Carson, a spokesman for Mr. Clinton, said Mr. Clinton’s appearance at the trade show was not an endorsement of Text 2Help or any other program.

Similarly, Mr. Bush’s spokesman, Jim Appleby, said, ”He was not there to endorse any product or program.”

Mark Siegel, a spokesman for AT&T Mobility, said many customers would not incur added costs because their monthly contracts included a certain number of text messages. He compared the 15-cent fee to using a stamp to donate through the mail, saying, ”This gets the money there faster and is much cheaper.”

The success of cellphone-based fund-raising for charity remains to be seen. A program that began in February to raise donations to support the city of New Orleans and its Mardi Gras celebration seeks to raise money through a Web site and the use of a short code program, Text to Give, created by PayPal. Chick
Ciccarelli, chief executive of MediaBuys L.L.C., the advertising agency and media buying club responsible for that effort, said 80 percent of the contributions had come through the Web site, with the short-code program
producing the rest.

“It hasn’t gone gangbusters,” Mr. Ciccarelli said of the cellphone fund-raising. ”It has been minimal at best, and I’m not sure it’s the best way of raising money, at least for a city.”

Consumer Watchdog
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