The maker of a popular scooter used by seniors and the disabled has agreed to pay a $100,000 penalty to settle Federal Trade Commission charges that it illegally called millions of consumers whose numbers were listed on the national Do Not Call Registry.
Electric Mobility Corporation, manufacturer of the Rascal Scooter, unlawfully used phone numbers collected from sweepstakes entry forms to call consumers despite their desire not to be contacted by telemarketers, the FTC said.The FTC's complaint accuses Electric Mobility Corp. and its owner Michael Flowers of making more than three million illegal sales calls, beginning in 2003, to consumers on the Do Not Call Registry -- all of whom had had entered the company's "Win a Free Rascal" sweepstakes.
Electric Mobility regularly encourages consumers to enter its sweepstakes through direct mail, newspapers and TV advertisements, which is how it managed to obtain millions of phone numbers, many of them on the registry.
According to the FTC, in the fine print under the section of the sweepstakes entry form allocated for the contestant's phone number, the company reminded consumers to list their phone number so the company could contact them in the event they became "the next lucky winner."
The FTC charged that the company violated both the FTC Act and the Do Not Call provisions of the Telemarketing Sales Rule.
Although the Do Not Call Registry prohibits most telemarketers from contacting registered consumers, the FTC's Telemarketing Sales Rule does permit companies to call consumers on the list for up to 18 months if it enjoys an "established business relationship" with the consumer and has not been asked to stop calling.
The Telemarketing Sales Rule, however, doesn't allow companies to use completed sweepstakes entry forms as a basis to establish a business relationships with consumers. The FTC also noted that it has regularly emphasized the fact that managing to acquire a consumer's phone number -- as Electric Mobility Corp. did via its sweepstakes -- doesn't exempt a company from the Do Not Call rules.
The FTC order bans Electric Mobility Corp. from using sweepstakes entries as the basis for claiming an established business relationship with any consumer. The company will also be subject to monitoring and reporting requirements to ensure compliance with the FTC order.
Although Electric Mobility Corp. owner Flowers was ordered to pay a $100,000 fine, a $2 million penalty against his company was suspended due to its inability to pay. If it turns out Electric Mobility Corp. lied about its financial condition, the full $2 million penalty will be due immediately.
Information for consumers about the Do Not Call Registry can be found here, and information about complying with the Telemarketing Sales Rule can be found here.
Take the first steps to building your portfolio.View Course »