Watchdog warns donation bin firms over charity status

MONTREAL — The Competition Bureau is tackling misleading practices involving clothing bin collections in Canada by warning two commercial operators in the Montreal area to stop giving the false impression that all or part of the proceeds are destined for charities.

The federal agency, acting under the deceptive marketing provisions of the Competition Act, sent warning letters to the two companies, which it did not identify, requiring them to correct the information on their bins.

Some of the bins often found in parking lots give donors the impression they are collecting for charity, while others even imitate the donation bins of real charitable organizations, it said.

In 2014, the bureau took similar action in Vancouver, which resulted in for-profit businesses correcting the false or misleading information on their donation bins.

“Misleading information on clothing donation bins has a negative effect on the charities that depend on the public’s donations to survive,” Matthew Boswell, senior deputy commissioner, said in a statement Wednesday.

He said the bureau took action so consumers can make informed decisions before donating, while also warning other companies considering using such deceptive approaches.

Three Montreal charities launched a complaint against a dozen firms more than two years ago claiming their activities, which also include placing bins on public property without permission, cost Montreal’s charitable sector millions of dollars in lost revenue.

“Our volumes of donated clothing have decreased by 30 per cent over the last three years,” said Jean Laberge, executive director of Big Brothers Big Sisters Foundation of Montreal. That has translated into a $300,000 a year loss on its $1.8 million revenues last year.

He said the coalition complained about groups that confuse donors by using words such as federation or foundation to suggest proceeds are given to charities.

While up to eight charitable groups have 400 to 600 bins scattered across the area, for-profit operators have 1,200 to 1,500 that are often set up without municipal or shopping centre permission.

Laberge said charitable groups don’t oppose private groups collecting clothing donations as long as the rules are the same for everyone.

He said the coalition is satisfied with the bureau’s move to address a national problem.

“We are happy with what they have done in Montreal [and] if they can do more it’s great for organizations in other regions.”

The bureau said it is continuing to monitor the situation in Montreal and elsewhere in the country and will take action if it suspects that other organizations are using a similar approach.

Municipalities have also attacked the placement of collection bins by banning them or limiting where they can go.

Nearly one-third of Montreal’s 19 boroughs have laws that address problems created by a couple of dominant businesses, said Coun. Lionel Perez.