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While federal campaign finance regulators aren’t known for their aggression, things have gotten so bad that they’re practically begging Congress to give them more weapons to go after political scams—including a recurring donations scheme favored by Donald Trump that has fleeced unwitting supporters for years.
But the recurring donations tactic is just one issue the Federal Election Commission highlighted last week when it published its draft legislation recommendations, the legal wish list the agency sends Congress each year.
It’s not the first time the FEC has floated many of those same proposals, which include requests to shut legal loopholes related to the personal use of political funds, so-called “scam PACs,” and straw donor schemes. The agency asked Congress to put more muscle behind those laws last year, too, but lawmakers seem even more averse to the idea than the notoriously sluggish FEC, whose routine partisan deadlocks over enforcement have led critics to declare the agency “broken.”
Watchdog groups say Congress should pay attention.
Saurav Ghosh, director of federal campaign finance reform at the Campaign Legal Center, told The Daily Beast these renewed requests indicate that the FEC “absolutely agrees these are problems that need fixing.”
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“That agreement is so unusual that it should send a message, but I’m not sure if there’s any change of the facts on the ground to prompt action,” Ghosh said. “It’d be great if they took action before the 2024 election, because it’s fair to think these problems will rear their head again.”
Viki Harrison, director of constitutional convention and protecting dissent programs at Common Cause, said the FEC’s request should be a “wake-up call” for Congress.
“This is an ever-changing field, and the bad actors are always going to try to find a way around the law, but these are all really good policies, and Congress should have implemented them,” Harrison told The Daily Beast, adding that, after multiple requests have gone unanswered, it “sounds like they’re begging” for help.
The scammy tactics identified in the draft request are indeed alive and well.
Take the recurring donations tactic. Throughout the midterms, political committees continued barraging potential donors with controversial fundraising requests with pre-checked boxes to make contributions recur automatically. That’s despite widespread previous reports that 2020 donors—many of them elderly—had complained that the language of those solicitations misled them, claiming they weren’t aware at the time that they were authorizing repeat withdrawals. Many donors have said it’s difficult to cancel the action or get their money back.
A 2021 New York Times investigation found that the tactic had “ensnared” numerous Trump supporters during the 2020 election and its aftermath, even tricking some longtime political operatives. In all, Trump’s 2020 fundraising apparatus refunded more than $120 million, according to FEC data, whereas Joe Biden’s operation—which did not use the tactic—returned just $21 million. (Some Democrats have used pre-checked boxes in the past.)
After that report, the FEC—which said in its 2021 request as well as this year’s draft proposal that it has fielded numerous complaints from hoodwinked donors—asked Congress to ban the use of pre-checked boxes.
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“Commission staff are regularly contacted by individuals who have discovered recurring contributions to political committees have been charged to their credit card accounts or deducted from their checking accounts,” the draft reads, as it did a year ago. “In many cases, the contributors do not recall authorizing recurring contributions. Often, these contributors have attempted unsuccessfully to cancel the recurring transactions with the political committee prior to contacting FEC staff.”
Harrison said “there’s a lot of support from the public on the recurring donations issue, where they’re absolutely targeting elderly donors and using algorithms to do that.”
Congress, however, hasn’t acted. Neither, it appears, have many Republicans.
Following investigations by multiple state attorneys general—and a subsequent Minnesota lawsuit against GOP digital small-dollar fundraising behemoth WinRed—Democrats have scaled back on the tactic.
But Trump, the Republican National Committee, the National Republican Senatorial Committee, and numerous GOP candidates have continued to bilk 2022 midterm donors with those pre-checked boxes. A Daily Beast investigation earlier this month found that GOP donors who received refunds ahead of the 2022 midterm were older than the average GOP or Democratic donor, with those averages higher still among Trump contributors.
And so, like last year, the FEC’s draft request asks Congress to ban the practice and require more clarity with donors when asking for consent and withdrawing funds.
“No one wants this, on either side of the aisle,” Harrison said, noting that the government’s failure to address what she called “common sense” ethical concerns only further entrenches voter cynicism.
She pointed to scam PACs as a case where “common sense” hasn’t made much headway.
“Scam PACs” are political groups that exploit loopholes in campaign finance laws, telling voters they’re raising money for a certain candidate or cause, while in reality that money goes almost entirely to the PAC operators—or, as the FEC puts it, “fundraising vendors, direct mail vendors, and consultants in which the political committees’ officers appear to have financial interests.”
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Recent years have seen a spike in scam PACs posing as charities, with some donors saying they weren’t aware they were even giving to a nominally political group to begin with.
The FEC also acknowledges this “recurring pattern,” and reminds Congress in its draft that it made this same request in 2017, 2018, and 2021. (In 2019 and 2020, the FEC lacked a quorum.)
While members of Congress have demonstrated bipartisan appetite to snuff out scam PACs, federal legislative efforts haven’t made headway. That leaves enforcement to the Justice Department and state and local authorities, who dedicate their limited resources only to the most obscene violators. The FEC, meanwhile, can only abide by its mandate, which isn’t currently explicit enough to close the loophole.
“The divisiveness and the absolute cynicism, it’s just too much,” Harrison said. She compared the FEC’s enforcement division to a “graveyard” and said that political financing plays “a huge role” in alienating voters, because “people are just expecting someone to be sketchy.”
Nowhere is that idea crystallized quite as well as another issue targeted in the FEC draft: the personal use of political funds.
While the law prohibits candidates from using campaign money to pay for personal expenses, it doesn’t explicitly extend that prohibition to other types of political committees—namely, leadership PACs, which officeholders and candidates routinely tap as personal “slush funds.”
And again, Trump provides the most salient example. His Save America leadership PAC has spent hundreds of thousands of donor dollars at his own properties, shelled out tens of thousands in “consulting” fees to a high-end fashion designer favored by his wife, and covered millions in legal fees for potential key witnesses against him.
Ghosh told The Daily Beast that the behavior of Trump’s leadership PAC—which in the wake of the Jan. 6 House investigation drew accusations of wire fraud—“helped shine a brighter spotlight on the issue.”
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But Trump isn’t alone, Ghosh said. And the FEC makes the same point to Congress, writing—as it did last year—that they’ve seen “a substantial number of instances where individuals with access to the funds received by political committees have used such funds to pay for their own personal expenses.”
The proposed remedy would extend the ban from campaign committees specifically to “any political committee,” which would account for leadership PACs, like Save America.
But Harrison pointed out that the FEC is asking a favor from a hostile audience—elected officials, many of whom enjoy the personal benefits afforded by their leadership PAC accounts.
“You’re asking people in power to voluntarily give that power up,” she said.
But there’s at least one bright spot for reform advocates. The FEC’s draft enjoys “unanimous support” internally, according to Commissioner Dara Lindenbaum, a Biden appointee to the bipartisan commission who was elected chairperson earlier this month.
Lindenbaum told The Daily Beast that, while the draft hasn’t been approved, she, like her Democratic and GOP colleagues, supports the request “as written.”
Another Democratic commissioner, former chair Ellen Weintraub, echoed that support in a statement to The Daily Beast, calling for a tougher response to bad actors trying to grift off of democracy.
“I hope that Congress will heed the unanimous request of the Commission for stronger tools to combat scams on donors who are simply trying to exercise their First Amendment rights,” Weintraub said.
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