Top DNC Violations #8
Rascal Scooters are a form of electrical scooter that has been designed specifically for people who have movement problems. They are mainly purchased and used by the elderly or disabled people who need help getting around in their every day lives.
The scooter is manufactured by the company Electric Mobility Corporation, and is owned by Michael Flowers. The company uses telemarketing as a party of its marketing strategy to make consumers aware of new products, promotions and competitions that are running.
What Did Electric Mobility Corp Do Wrong?
The FTC claims that Electric Mobility Corporation used the contacts gathered from sweepstakes entry forms to call and solicit clients who had been registered with the national DNC registry.
The company used emails, television advertisements and newsletters to encourage consumers to enter into a “Win a Free Rascal Sweepstakes”, and the consumers were required to put their numbers on the form, so that the company will be able to call them if they turned out to be the lucky winner.
The company then used these contact numbers to call millions of people who had entered into the sweepstakes, despite the fact that many of these people belonged to the Do-Not-Call registry.
The Telemarketing Sales Rule in the FTC states that a company is allowed to contact consumers for 18 months after they register for the DNC, but only if they have an established business relationship with this contact.
The rule does however state that contact information gotten through a sweepstakes, doesn’t constitute to having a business relationship with the consumer. Therefore the Electric Mobility Company and Michael Flowers were in violation of both the FTC act, and the Do-Not-Call act of the Telemarketing Sales Act.
The company and Mr Flowers made a settlement in April 2011 with the FTC, but have yet to admit any guilt to their violations. The FTC still ascertains that the Electric Mobility Corporation and Michael Flowers were guilty of making over 3 million illegal telemarketing calls since 2003.
The charge bans EMC and Michael Flowers from using sweepstakes as a way to establish a business relationship with the consumer, to try and find a way around the national DNC. The company will also be monitored for a period of time, and will have to report to the FTC to ensure that it has taken measures to comply with the orders’ terms.
A fine of $2 million was given to EMC, but it was suspended due to the companies inability to pay the money, If the company is found to have falsified its financial status, it will be immediately liable for the full amount of money. Michael Flowers was charged with a $100,000 fine.
The Electric Mobility Corporation was already in financial stress before the charge, as they made a case that they were unable to pay the fine. This combined with the large number of items being discontinued by the company point to a decided down turn in business, however they are responsible for the manufacture of a lot more than scooters and the charge hasn’t seen these other products being damaged.
The reputation of Rascal Scooters themselves, and that of Michael Flowers was only tarnished slightly and their scooters still sell extremely well throughout the country to the elderly and disabled population.
The owner of the company incurred the heaviest losses with his fine of $100,000, but so far he seems to have made the necessary changes to his company’s telemarketing strategy that not only complies with the FTC order and doesn’t violate the TSR or Do-Not-Call acts, but that also allows the company’s consumers the level of privacy which they have requested.