A company operating 318 clothing donation bins in Michigan is being told stop operating the bins or face legal action for misleading the public on how the donations are being used.

The donations go to a professional fundraising company, not to charity.

On Wednesday, Michigan Attorney General Bill Schuette announced a Cease and Desist Order against professional fundraiser Golden Recyclers, Inc.

Schuette alleges that the Dearborn-based company is illegally operating clothing donation bins and misrepresenting what happens to the donated items.

Golden Recyclers currently operates 318 bins throughout Michigan, largely in the Metro Detroit area. The alleged 2,594 violations carry maximum penalties of $10,000 per violation.

Golden Recyclers operates two differently labeled types of bins, both of which violate the Charitable Organizations and Solicitations Act. The first type of bin implies that it collects clothes for the charity, Cancer Federation, Inc.; the second type of bin is labeled with the logo “Mercy” but provides no indication where those donations go. Donations to either bin do not go to charity. The donations go to the professional fundraiser, Golden Recyclers.

The State has given Golden Recyclers 21 days to resolve the matter or face civil action in court. The Attorney General is also ordering Golden Recyclers to produce information and financial records regarding its operation of the bins.

The investigation began following a consumer complaint about the vagueness of the bins labeled “Mercy.” Cancer Federation responded saying that the “Mercy” bins were unauthorized and that it was ordering Golden Recyclers to stop their operation, but Golden Recyclers continued to operate the bins.

The investigation also revealed that Golden Recyclers was operating a second type of bin labeled with the name of Cancer Federation Inc., but that these bins also violated the Charitable Organizations and Solicitations Act.

Golden Recyclers pays $12,000 a year to Cancer Federation Inc. to use its name under their current contract. Under the contract, all donations placed in the bins go to Golden Recyclers, not Cancer Federation Inc., which is not disclosed on the bins.

It is not yet clear what Golden Recyclers does with the donations placed in the bins.

Golden Recyclers earned gross receipts of $223,000 over a six-month period in 2015.

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