Michigan attorney general sues company over deceptive clothing bins throughout state

American Textile Recycling Service accused of using deceptive clothing bins

By Meaghan St Pierre - Producer

DETROIT - Michigan Attorney General Bill Schuette is suing a Texas-based clothing donation bin operator, saying it had deceptive clothing bins in the state, including Metro Detroit.

"They picked a charity that tugs at the heart strings of most people," said Andrea Bitely, Schuette's communications director.

The clothing bins have the Michigan Humane Society logo on them, but they are owned by American Textile Recycling Service (ATRS).

"In every city where we operate the clothing and shoe donation bins, we are partnered with a local charity in that town and they receive funding for every pound of these donations that are collected," said Debra Stevenson, chief marketing officer at ATRS.

Bitely said they spotted a problem on the company's financial disclosure.

"When we noticed that, we contacted ATRS, which is the company that's running these bins, and said, 'Hey guys, tell us what's going on. Explain the difference between what the bin says, which is 100 percent of donations go to the Michigan Humane Society, and what we're seeing on your annual filings, which is only pennies on the dollar going to the Michigan Humane Society,'" Bitely said.

ATRS owns 251 bins in the state. Schuette's office said donations in 2016 generated $835,000 in revenue, but ATRS only paid the Michigan Humane Society $49,000, which is 6 percent of the total revenue from the bins.

"We're taking this very seriously, and Michigan residents are very generous people," Bitely said. "(They) open their pocket books. They open their closets up to help others, and in this case, they were deceived."

In April, Schuette's office ordered ATRS to stop using deceptive stickers.

"We have worked very hard with the AG's Office to step-by-step comply with all the regulations that they have brought to our attention, and in terms of the signage and things that they brought up to us, we resolved those concerns within 24 hours and are able to continue having our donation bins in the community," Stevenson said. "So, we just want to keep working with them to resolve the issues that they have and make sure we're supporting the regulations that exist."

The bins Local 4 checked around Metro Detroit did show that the signs had been changed to remove the 100 percent portion.

In November, the Michigan Attorney General's Office filed a lawsuit to get money back from ATRS. According to Schuette's office, the lawsuit seeks restitution, civil penalties of up to $10,000 per violation and other relief.

"Michigan residents are the real victim," Bitely said. "The Humane Society had a legitimate contract with this company in which they knew the funds they were going to get. Now, the problem is ATRS was being deceptive on their charity events and alleging that all 100 percent of the proceeds from these bins was going to charity, which we all know now is not true."

"It is a business, and it's an important one," Stevenson said. "But along the way, we're helping people. We're helping pets. We're helping the planet. It's a circle of reuse that we're very committed to. I think there might be a misunderstanding about all the good that donation bins do in the community."

Local 4 received the following statement from the Michigan Humane Society:

The Michigan Humane Society is aware of Attorney General Bill Schuette's investigation of the American Textile Recycling Service, better known as ATRS. Like its donors, the nonprofit looks forward to learning of the case's outcome in court. Until then, the organization will continue weighing its fundraising options while pressing for transparency among all its vendors.

"We are Michigan's oldest and largest animal welfare organization, and we take that status very seriously," said Matthew Pepper, president and CEO of the Michigan Humane Society. "If one of our collaborators is misleading people, then we want to know about it, both for our supporters' sake and for the many other nonprofits following our lead."

Animal lovers have another option if they wish to recycle textiles, but are temporarily concerned about drop boxes. The MHS welcomes donations of blankets and towels, which it uses to carry, comfort and dry the many animals in its care.

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