Texas Attorney General Ken Paxton has asked the Federal Election Commission (FEC) to curb the use of untraceable electronic payment methods for political donations amid allegations of fraud by political fundraising platform ActBlue. filed a petition asking for new rules. In a letter to FEC Acting General Counsel Lisa J. Stevenson, Mr. Paxton expressed concern about fraud caused by prepaid cards. He is referring to an ongoing civil investigation that has revealed that fraudsters are actively using these cards to make illegal donations.
straw donation system
Paxton's petition highlights the office's investigation into so-called straw donor transactions, in which donors hide their identities by attributing their donations to others. In his letter, Paxton wrote:
Specifically, the Attorney General corroborates much of the public reporting regarding straw donations on political committees' online platforms. They discovered that sophisticated attackers can appear to post under someone else's name in a way that makes it nearly impossible to detect the poster's true identity.
The letter names ActBlue, a leading digital fundraising platform. Paxton said the platform opposes new regulations that would facilitate such transactions and reduce fraud. Highlighting concerns about the platform's role in these activities, Paxton writes:
However, it is noteworthy that one of the most prominent online donation platforms, ActBlue, submitted comments to the Commission encouraging it not to adopt regulations for prepaid cards that would discourage this potential fraud.
Paxton's discovery
Paxton's letter is supported by the results of his office's civil investigation, which revealed large amounts of fraudulent donations made using prepaid cards.
Many people's names have been used to make hundreds of unique donations totaling thousands of dollars annually. Donations are often made in these people's names literally multiple times a day, almost every day of the year.
Our investigation revealed that some attackers use a variety of methods to hide their true identity. This includes payment methods that are untraceable and leave no digital footprint. Paxton claims that these attackers typically use techniques associated with criminal activity. “Civil investigators don't typically see this type of criminal evasion,” he said.
Challenging act blue
ActBlue previously argued against FEC regulations regarding prepaid cards. Paxton disputes ActBlue's two main claims, calling them “inaccurate and misleading.”
First, he disputes ActBlue's claim that “an online posting is never made unless the poster provides identifying information.” Paxton explains that contributors can provide false information.
“That's because ActBlue's platform only requires a poster to provide someone else's identity to post, not necessarily their own,” Paxton argues. (Emphasis in original.) He further clarifies:
Prepaid cards don't require you to be who you say you are, making it easier to protect your identity.
Paxton also disputed ActBlue's claim that political committees cannot distinguish between prepaid cards and other forms of payment.
“As a matter of current technology, ActBlue's claims are false,” the attorney general wrote. He added that his office's investigation confirmed that payment processors can indeed identify prepaid cards. Therefore, he argues, ActBlue and similar platforms could contract with payment processors to filter these payment methods if they so choose.
The urgency of regulatory action
Paxton is calling on the FEC to act quickly to protect the integrity of campaign finance laws. Without regulatory changes, Paxton believes bad actors will continue to exploit these loopholes, undermining public trust in the political process.
The petition asks the FEC to adopt two specific rule changes to close loopholes in current regulations.
The first suggestion is to verify the identity of the donor. Paxton seeks to amend 11 CFR Section 104.14 to ensure that political committees have steps in place to ensure that the donor's identity matches the information recorded by the issuer of the donor's payment card. There is.
Paxton also called for a ban on certain prepaid cards for political donations. These cards are often used to hide the identity of the actual poster, he claims. “Prepaid cards pose a much greater risk (than cash),” Paxton wrote, adding that ActBlue in previous comments to the FEC said prepaid cards may pose less risk than cash. disputes the claim that it is expensive.
significance
Paxton reflected on the importance of the findings, emphasizing that the evidence points to the possibility of illegal interference in U.S. elections through disguised political donations. He emphasized the seriousness of foreign contributions and contributions that exceed legal limits funneling into campaigns and could circumvent current campaign finance laws.
As the FEC reviews Paxton's petition, the issue of untraceable political contributions is likely to remain a topic of discussion, along with potential regulatory changes that could reshape political fundraising practices. .
Act Blue Investigation
ActBlue has raised millions of dollars for Democratic campaigns, with an estimated $1.5 billion raised from 7 million donors, The Hill reported. Vice President Kamala Harris' 2024 campaign received a record $200 million in just a few days through ActBlue, further increasing Republican scrutiny. Conservative figures like Charlie Kirk publicly demanded action from Republican state leaders.
Paxton's call for stronger federal regulations follows investigations by Republican attorney generals across the country, particularly Jason Miyares of Virginia.
In addition to Miyares' investigation, Missouri Attorney General Andrew Bailey said his team is “investigating” allegations surrounding the platform.
Wyoming Secretary of State Chuck Gray has launched a formal investigation into ActBlue's alleged money laundering and identity theft scheme.
In early September, a Congressional investigation led by Rep. Brian Still (R-Wis.) uncovered potential criminal activity involving ActBlue. The investigation revealed a suspicious pattern of donations. This includes the use of straw donors to funnel illegal funds to campaigns. After analyzing more than 200 million political contributions, investigators sent the results to the state attorney general's office for further investigation.
On October 10, 19 Republican attorneys general sent a letter to ActBlue expressing concerns about potential irregularities in FEC filings. They requested more information about ActBlue's donation verification process. The letter emphasizes the need for transparency to ensure donations are made legally and are not misused. Responses were requested by October 23rd.
ActBlue has denied any wrongdoing and called the investigation a “partisan attack” and “disinformation.”
