- Experts are baffled and stunned by the ‘money bomb’ tactic reported by the Trump campaign.
- A New York Times investigation detailed how supporters were tricked into making recurring donations.
- So far, it is unclear whether the reported actions are illegal or simply unethical.
- See more stories on the Insider business page.
Elderly donors who gave a few hundred dollars to former President Donald Trump’s reelection campaign were shocked to see thousands of people lose their accounts. Refund requests increased in the final months of the campaign. The ensuing spikes in Trump-associated credit card fraud claims even hit the radar of America’s largest banks.
A New York Times investigation published on Saturday detailed a recurring donation scheme allegedly referred to as “the money bomb” that the Trump campaign used to fill its coffers in the final months of the campaign via the fundraising platform. WinRed Republican Party.
The tactics included pre-ticked recurring donation boxes at the bottom of fundraising emails and creating an opt-out instead of opt-in system for recurring donations. And as election time approached, the fine print on those bright yellow donation boxes got smaller and more confusing, prompting donors, including many seniors, to unknowingly sign up to give thousands of contributions.
Asking for recurring donations is common practice for Democratic campaigns and nonprofits, but Trump’s campaign methods were particularly alarming to many experts.
“Groups do this all the time in a non-toxic way, and of course Trump, being Trump, did this 72 million times in the wrong direction, and it started to look like a fraud,” Beth Rotman, National Director of Money and Politics. at the advocacy group Common Cause, he told Insider.
The payments, according to The Times, essentially functioned as an “interest-free loan” from Trump’s donors to his campaign, which faced upheaval and financial turmoil in the months leading up to the Nov. 3 election. Eventually, tens of millions of donations were refunded over the course of 2020, and WinRed pocketed the transaction fees.
As Insider’s Tom LoBianco reported, former Trump campaign manager Brad Parscale had booked nearly $ 200 million worth of TV spots in the expectation that an increase in last-minute donations would cover the cost, a misstep. that “left the reelection effort totally ruined at the beginning of October.”
The Trump campaign’s recurring donation tactic stumped and surprised even the most seasoned campaign finance professionals Insider interviewed.
‘A complete scam’ of a plan
Fred Wertheimer, the chairman of Democracy21, who has been a leader in the fundamental battles of ethics reform and campaign finance in Congress and the courts for the past four decades, told Insider that he had “never seen anything like this”.
“I’ve never seen anyone do what the Trump campaign just did,” Wertheimer said, arguing that the behavior of the Trump campaign constituted elder abuse and is “below the bottom of the barrel” of acceptable fundraising tactics. money.
“This is a total scam, they knew exactly what they were doing,” he added. “They knew they were tricking people into subscribing to what they thought was one contribution, when in reality they were signing up for multiple contributions. Then when they got caught, they returned the money. It’s like a bank robber gets caught. and say, ‘Oh well, I paid the money back.’
The highly unusual nature of Trump’s campaign methods was also reflected in the staggering rate of refunds. While it is routine for presidential campaigns, particularly those that operate on a large scale, to repay some contributions to donors who unknowingly delivered the legal cap, the large number of refund requests and the increase in refunds attracted experts and connoisseurs.
In total, the Trump campaign repaid $ 122 million in online donations, including 10.7% of their donations raised through WinRed, The Times reported. By contrast, President Joe Biden only repaid $ 21 million of online donations and 2.2% of donations that came in through ActBlue.
“I’ve been here almost six years and I can’t think of anything particularly like this where people didn’t know they were making recurring contributions,” said Jordan Libowitz, communications director for Citizens for Ethics and Accountability in Washington (CREW) he told Insider. “Returning 10% of donations is a huge and incredible amount.”
in a long statement monday issued through his Save America PAC, Trump denied the article’s main claims, arguing that the Trump campaign always promptly refunded donations on demand, noting that a contribution rate of less than 1% is subject to formal disputes through from credit card companies. He also attacked The Times’ reports as “a completely misleading and one-sided hit piece” and went on to falsely claim that the 2020 election was stolen.
The law doesn’t always take campaign finance tactics into account
Experts interviewed by The Times and Insider agreed that the actions of the Trump campaign and WinRed cross an ethical line, especially with regard to elderly donors who say they were misled. But it is still unclear whether his schemes go against campaign finance or consumer protection laws.
“This is not a common thing that we’ve seen before,” Libowitz said. “It could be that this is something without a lot of regulation around it, just because the laws follow the issues.”
Common Cause’s Rotman told Insider that the new revelations about Trump’s campaign present an excellent opportunity for agencies like the Federal Election Commission and lawmakers in Congress to set new and updated regulations and standards for requesting recurring donations. online.
“It’s not really a fraud, but it’s a potential hoax,” Rotman said of Trump’s field tactics. “You’re talking about cheating attempts, and you need anti-cheating regulations and statutes. And you can do it with clearer guidance and enforcement. It shouldn’t be that easy for people to be confused about how much they are giving and how often.”
Craig Holman, an ethics and campaign finance lobbyist for the democracy watchdog group Public Citizen, told Insider that federal campaign finance laws and the Internal Revenue Code primarily prohibit soliciting campaign donations above the legal limit, not necessarily the tactics used in those requests.
“I’ve never seen a fundraising practice for candidates and party committees like this before, but the laws and regulations governing applications are pretty lax,” Holman said. “It could be argued that the application method would likely cause illegal contributions beyond the contribution limits, but it appears that refunds were made in such cases, so it is unlikely that legal action could be taken against the Trump and WinRed campaign. “.
Meredith McGehee, executive director of the campaign finance reform advocacy group Issue One, told Insider that Trump’s campaign activities raise new questions about the intersection of campaign finance and consumer protection, including whether the platforms Fundraisers like WinRed will hold themselves to the same standards as other companies. , especially for actions that could be seen as predators of older people.
“Basic consumer law is that it gives consumers a clear and conspicuous notice that a commitment is going to be fulfilled. It seems that in the case of pure consumer law, this failed the test that people know in what are they getting into, “he said.
In the long run, WinRed’s mandate to make a profit and catch up with political opponents on the Democratic side in the online fundraising game creates a more cut-free incentive structure, bordering on ethical gray areas like this. McGehee added.
“It is important to note that WinRed is structured as a for-profit entity as opposed to ActBlue, which is a non-profit. When you are a for-profit company, the incentives to clarify these things are less strong: they are a business and your job is to make money, “he said. “Given that they operate as a company, the question I would immediately ask myself is: is this good business practice?”
Even if the Trump and WinRed campaign do not face immediate consequences from federal agencies, the damning accusations could damage the platform’s capacity going forward and, by extension, the Republican Party.
“Highly unethical and deceptive fundraising practices will inevitably take their toll,” Holman told Insider. “These donors are unlikely to ever make a campaign donation to Trump and WinRed again.”