The American Diabetes Association (ADA) received a $10 million commitment from US pharmaceutical behemoth CVS in November 2021, to be distributed over three years. The donations, according to CVS’s social responsibility team, will support diabetic families and fund research to end health disparities. Additionally, the business announced that, “during National Diabetes Month, all CVS Pharmacy locations nationwide will host an in-store fundraising campaign to allow customers to support the ADA.”
A lawsuit (pdf) against CVS that was filed earlier this year in federal court in New York claims that CVS failed to disclose the fact that the donations gathered from customers during in-store fundraising would not be an addition to the initial pledge. Rather, they would be used in lieu of donations coming from CVS’s coffers.
Kevin McCabe, a resident of New York who contributed to CVS’s in-store ADA campaign, filed the complaint, which claims that between November 2 and November 27, 2021, thousands of CVS customers were asked at the register if they wanted to add a donation to the ADA on top of their transaction amounts. Customers had the option of choosing a donation amount or declining. They received no additional context regarding the donations they made.
The complaint claims that “CVS did not simply gather campaign donations from customers and send them to the ADA, but instead counted campaign donations toward the satisfaction of a legally binding obligation CVS had made to the ADA to donate $10 million to the ADA during the three-year period of 2021 through 2023.”
In other words, it appears that unaware customers helped to fund CVS’s charitable pledges.
The lawsuit, which is requesting class-action status, alleges that CVS committed fraud by failing to disclose the precise purpose for which the funds raised would be used. It demands damages in accordance with state laws, which range from $100 in statutory damages for Alabama potential class members to $5,000 in Michigan and $10,000 in Kansas for class members.
A CVS representative, Mike DeAngelis, told Quartz via email: “The claims asserted in this action lack merit. We have filed a motion to dismiss that details the plaintiff’s inaccurate description of our campaign and its purpose.
The company claims that CVS never intended to make a $10 million corporate donation, but rather intended to hold customer fundraisers. According to the business, it only agreed to increase customer donations by a small amount—enough to reach the $10 million commitment—total. Evidently, CVS did not accept a $10 million unconditional debt from the ADA at the time of signing, according to CVS.
The contract between CVS and the ADA, which CVS attached to the dismissal request, confirms that the drugstore chain would have had to pay the ADA $10 million even if it had not received any consumer donations, according to Todd Bank, the attorney for McCabe.
Whether CVS was required to pay or not doesn’t really speak to a morally important, if not strictly legal, complaint point: CVS failed to disclose to its customers that their donations were a part of a pledge the company had already made. Although it might not be fraud, that is anything but transparent.
Additionally, it’s unclear whether there were set donation milestones for the three years or what would happen if in-store donations reached $10 million. When contacted for clarification on these inquiries, CVS and ADA did not respond right away.
On its website, CVS lists additional collaborations it has with medical institutions. A few of them include pledges for donations based on in-store fundraising, including those to the American Heart Association, the Alzheimer Association, and the American Cancer Society.
For its part, CVS customers who made in-store donations at the retailer’s checkout registers confirmed they are giving the money to the ADA. The lawsuit did not name the nonprofit and made no accusations against it.