Texas accuses Democratic fundraising platform of enabling 'rampant donor fraud'

FORT WORTH, Texas (CN) — Texas Attorney General Ken Paxton sued Democratic fundraising platform ActBlue Monday, claiming it allows donors to make fraudulent contributions through gift cards and prepaid debit cards.

ActBlue is a digital fundraising platform that enables small-dollar donors to contribute to Democratic candidates and progressive causes. It is a major part of the Democratic Party's fundraising infrastructure, reportedly raising almost $1.8 billion last year.

The platform came under scrutiny earlier this month when The New York Times reported a law firm working for ActBlue wrote in private memos last year that the platform's CEO gave potentially misleading information to Congress about how it vetted donations to make sure they weren't illegally coming from foreign nationals.

While ActBlue told Congress that it used "multilayered" screening of contributions to "root out" illegal overseas donations, the law firm found some the steps the platform detailed weren't always followed, the Times reported. The firm reportedly told the platform that "it can be alleged that ActBlue accepted and/or facilitated the acceptance of foreign national contributions into American elections" and that "because ActBlue's staff was aware that its system was not as robust as necessary, it could be alleged that these violations were 'knowing and willful.'"

Paxton cites this reporting in a petition filed in Tarrant County District Court accusing ActBlue of facilitating "rampant donor fraud." The Texas attorney general focuses on the platform's acceptance of donations through gift cards and prepaid debit cards, which Paxton claims are uniquely suited to conceal donor identities.

"ActBlue knows that on its platform when a donor's contribution is made using a gift card, the card is effectively a cash donation for which the donor can simply provide someone's information, not his or her own, to evade campaign finance regulations barring the donor's eligibility," Paxton writes in the complaint. "ActBlue does not seek or obtain proof of a gift card donor's identity."

Paxton claims that, despite telling Congress it had ceased accepting donations through gift cards in September 2024, the platform later quietly resumed accepting them. As part of an investigation into ActBlue, Paxton writes in the complaint, investigators from the Texas Attorney General's Office successfully made donations through the platform using gift cards, including one made using a fake identity.

By falsely telling Congress it would no longer accept donations through gift cards, Paxton argues ActBlue misled the public in violation of the Texas Deceptive Trade Practices Act. He seeks temporary and permanent injunctions prohibiting the platform from accepting donations through gift cards or prepaid debit cards, as well as civil penalties of up to $10,000 per DTPA violation.

"The radical left has relied on ActBlue as a way to funnel foreign donations and dark money into their political campaigns to subvert our laws and compromise the integrity of our elections," Paxton said in a statement announcing the lawsuit. "ActBlue lied to Congress and to the American people, and I will ensure justice is served. It has blatantly ignored state law that prohibits deceptive practices, and it must pay for its illegal conduct. Fair elections are the foundation of our democracy, and I will work to ensure no illegal campaign donation flies under the radar."

In a statement to Courthouse News Service, ActBlue spokesperson De'Andra Roberts-LaBoo called the lawsuit "a thinly veiled attempt to distract from Ken Paxton's numerous legal and ethical issues ahead of next month's runoff."

"If he and his Republican allies actually cared about donor fraud, they would work to strengthen security standards across the board, including within their own operations, rather than targeting ActBlue," Roberts-LaBoo said. "Our platform has done more than any other, regardless of party, to prevent improper donations and protect donors. Full stop."