Six people have been arrested in police raids across Tyneside linked to allegations of human trafficking and modern slavery.
Northumbria Police said it believed a Lithuanian organised crime group was using victims to collect charity bags.
Men trafficked from eastern Europe were kept in shared accommodation with wages and benefits controlled by the gang, a force spokesman said.
He said 12 people had been taken to a victim reception centre.
The raids focused on properties in the Newcastle and Gateshead areas.
Police said a factory had been set up in North Shields, where the clothes would be processed and sold overseas, with a cut of the proceeds expected to go back to the charities.
The spokesman said the suspects ran a legitimate business which was used as a front.
It is alleged they brought in thousands of extra bags from abroad which were distributed to the workers to give out to the public.
The charities involved were unaware that many of the employees were potential slavery victims, police said.
Supt Steve Barron added: "Our priority is to safeguard vulnerable people in our region and victims of modern-day slavery, trafficking and associated offences are among some of the most vulnerable we will come across.
"Often individuals don't realise that they are victims and the small wage they earn in this country often exceeds anything they would earn in their home country.
"They are brought into the country on the promise of work, housed in sub-standard accommodation and their benefits and finances are all controlled by their employer.
"We do not believe that any of the charities involved would know that those collecting their bags were potentially victims of modern day slavery and human trafficking."