From Earworm to Courtroom: What the Kars4Kids Verdict Teaches Charities About False Advertising

The court decision prohibits the organization from broadcasting ads in California unless the ads contain specific disclosures about its religious affiliation and the geographic location of its primary beneficiaries. The Kars4Kids ruling is a reminder that courts and state attorneys general will scrutinize and punish charities’ advertisements that are false or may be misleading. 

What Was the Kars4Kids Case?

On May 8, Judge Gassia Apkarian of the Superior Court of California, in Orange County, found that Kars4Kids violated California’s False Advertising Law and Unfair Competition Law through its widely broadcast advertising jingle. For over two decades, Kars4Kids has broadcast TV and radio ads featuring children singing a catchy jingle with the organization’s phone number and urging listeners to “donate your car today.” The court described the jingle as relying on “extreme repetition, while simultaneously stripping it of all substantive facts.”

The plaintiff, a California resident, donated a 2001 Volvo after hearing the Kars4Kids ad “over and over” on the radio, which led him to believe that the organization served underprivileged children in California. He later learned that the proceeds instead primarily funded a New Jersey-based Jewish organization, Oorah. The court found that evidence presented at trial showed that “children, especially needy or underprivileged children,” were not the exclusive recipients of the donated car proceeds. Instead, Kars4Kids primarily funds Oorah’s programs including an adult matchmaking service, trips to Israel for teens, and summer camps in New York.

The court found that Kars4Kids’ ads were “misleading by omission.” Specifically, the court ruled that Kars4Kids concealed material facts, including that approximately 60% of funds go to Oorah, underprivileged children are not the primary recipients of the proceeds, and the organization funds gap-year trips to Israel and adult matchmaking services. Kars4Kids challenged the court’s ruling on appeal, arguing the court “got it wrong” by distorting their Jewish mission, misrepresenting trial evidence, and falsely portraying the charity as deceiving donors. As of June 4, the court has allowed Kars4Kids to resume airing their advertisements pending the appeal process. 

The ruling is not the first time Kars4Kids has faced regulatory scrutiny. The Minnesota Attorney General’s 2017 compliance review found that over 90% of the $90 million raised from 2012 to 2014 was spent on programs directly under Oorah’s control. Just last year, a class action was also filed in California federal court, asserting Kars4Kids violated California False Advertising and Unfair Competition laws as well as federal RICO law.

Examples of Other Enforcement Cases

The Kars4Kids litigation fits into a broader pattern of enforcement actions targeting misleading charitable fundraising. These past enforcement cases remain relevant to current advertisement compliance laws, demonstrating that regulators, at both the state and federal level, have consistently pursued organizations that disseminate false or misleading solicitations.

In FTC v. Cancer Recovery Foundation International, Inc., the Federal Trade Commission (FTC) and 22 state attorneys general sought a permanent injunction against Cancer Recovery Foundation International and the Women’s Cancer Fund, alleging false and misleading solicitations. The California Attorney General alleged that the Women’s Cancer Fund collected $18 million from 2017 to 2022, using telemarketing scripts and direct mail solicitations promising that donations would “go to directly help cancer patients and their families who are in need” with basic living expenses and “help save lives.” According to the complaint, the foundation spent only $194,809 on assisting cancer patients and their families. The remaining amount was allocated towards the president’s salary, for-profit fundraising, and overhead costs.

In a similar action, California v. Healing Heroes Network, California brought suit against the charity after it falsely claimed that 100% of donations helped wounded veterans. California’s Attorney General alleged that Healing Heroes Network allocated approximately only 10–15% of donations toward veteran causes. Likewise, in FTC v. Associated Community Services, Inc., the FTC and several state attorneys general alleged that Associated Community Services collected more than $110 million through telemarketing scripts and solicitations falsely claiming funds would support local charities for veterans, children, and firefighters. In reality, 5% or less of donations went toward the promised programs. 

Note that in addition to state charitable solicitation filings and an organization’s advertising statements, state regulators may also look to public disclosures on an organizations’ annual federal Form 990 to support enforcement of state consumer protection laws, as demonstrated by the Minnesota Attorney General’s 2017 compliance review of Kars4Kids, which found that the organization had been misreporting its car donation proceeds and understating its fundraising costs on Form 990, presenting donors with “a misleading financial picture of its operations.” 

What This Means for Charities 

The recent Kars4Kids decision and the broader enforcement landscape serve as a reminder that charities are not shielded from false advertising claims and enforcement actions. The cases discussed above demonstrate that the legal principles underlying current advertisement compliance laws continue to be actively enforced, by both state and federal enforcement agencies, and private litigants.

• Review advertising and solicitation materials. Audit all advertising and charitable solicitation materials, including TV, radio, online, and print versions to ensure they accurately represent the organization’s mission, the geographic and demographic scope of beneficiaries, and the specific uses of donor contributions. As the Kars4Kids decision makes clear, it is not just what you say but also what you do not say that can introduce litigation and enforcement risk. Liability can arise from false or misleading express representations, implied claims, and misleading net impressions due to the omission of material facts. Charities should also be mindful that donations received in response to charitable solicitation could be donor-restricted assets in certain circumstances. 

• Be aware of bipartisan enforcement. Both past and present federal administrations have enforced advertising compliance laws against charities engaging in misleading solicitations. State attorneys general have also been active in this area, and charities should be aware that a single national advertising campaign may trigger liability in multiple jurisdictions simultaneously.

• Monitor federal financial reporting. Charities should ensure that Internal Revenue Service Form 990 filings accurately report fundraising costs, program expenses, and inter-organizational transfers. As the Minnesota Attorney General’s compliance review of Kars4Kids demonstrated, state regulators have used financial misreporting to bolster enforcement actions. 

• Engage experienced counsel. Charities facing enforcement inquiries or considering changes to their advertising and charitable solicitation practices should consult with counsel experienced in both advertising law and charity regulatory compliance. The intersection of federal FTC authority, state attorney general enforcement, and private litigation creates a complex regulatory environment that requires specialized guidance. As the growing number of multistate enforcement actions demonstrates, early engagement with knowledgeable counsel can help organizations identify and address disclosure deficiencies before they become the subject of regulatory action or costly litigation.

Additional research and writing from Isabella Wellinghorst, a 2026 summer associate in ArentFox Schiff’s Washington, DC, office and a law student at American University Washington College of Law.