"Terrorize the seas with Pirate Maypul and her crew in the latest bundle LIVE NOW in our March Mid-Month update! Maypul and her plant companions Lily, Terry, and Poppy are all decked out in swashbuckling gear and ready to send your opponents to Davy Jones' locker. From 3/18 - 4/15 25% of all profits from this skin will be donated to Snail's House Ferret Rescue!"
Archive screenshot of the text.
I did a bunch of research on this and the way I understand reading the law, I have several concerns:
This marketing message raises serious legal and ethical concerns because it states that "25% of all profits from this skin will be donated to Snail's House Ferret Rescue" but if the rescue is not a registered 501c3 charity and is instead part of a for profit entity, this is likely misleading and possibly illegal under consumer protection and charitable solicitation laws.
Misleading Use of "Donated"
- The term "donated" strongly implies that the money is going to a recognized tax exempt charity.
- If Snail's House Ferret Rescue is not a registered nonprofit, then:
- The money is not a true donation (it's just revenue allocation).
- Buyers might assume their purchase is charitable giving, when in reality it's just supporting a private rescue.
- This could be considered false advertising or deceptive fundraising.
Commercial Co Venture (CCV) Laws
- This is a "cause marketing" promotion, where a for profit business (Pirate Software/Aether Studios) pledges a percentage of sales to a cause.
- In many U.S. states, this triggers Commercial Co Venture (CCV) laws, which require:
- Legal registration of the promotion before fundraising.
- Clear disclosure of donation details (e.g. "Snail's House Ferret Rescue is not a registered charity").
- Financial reporting on the funds raised and distributed.
- If they are not following CCV laws, they could face legal action from state attorneys general or the FTC.
Tax & Fraud Risks
- If Snail's House Ferret Rescue is part of mald's for-profit business, then:
- The "donation" is really just a business revenue shift, not a charitable contribution.
- The IRS could investigate if they claim these "donations" as tax exempt without nonprofit status.
- Buyers cannot claim tax deductions, but they may falsely assume they can.
What Could Happen if This is Reported?
- FTC or State Attorney General Investigation: If consumers complain about deceptive fundraising.
- IRS Scrutiny: If taxes are misreported.
- Game Company Liability: If they marketed the skin as charitable without proper verification.
- Twitch and Payment Processor Actions: If Twitch, PayPal, or Stripe detect misleading fundraising, they could ban the accounts.
Does This Violate Laws?
- If Snail's House Ferret Rescue is not a registered nonprofit, then yes, this could be considered deceptive advertising and potential CCV law violations.
- If they are properly disclosing that the rescue is not a charity, they may avoid legal trouble, but still risk ethical concerns.
This doesn't look good and should be reported to the proper authorities just to be safe, there is no harm in that.
Edit: Washington has CCV regulations concerning commercial co ventures (CCVs) under its Charitable Solicitations Act. While the state does not require CCVs to register or obtain a specific license, certain obligations must be met to ensure compliance.
Even though CCV laws don't directly apply, the marketing language ("donate") creates a consumer expectation that the money is going to a registered charity. This could lead to: consumer complaints, legal scrutiny from regulators (Washington AG, FTC, IRS), and potential fraud investigations if money is misrepresented.
