Rascal Scooters Pays $100,000 for Do Not Call Violations

The manufacturer of Rascal Scooters, used by disabled and senior consumers with limited mobility, will pay $100,000 to settle Federal Trade Commission charges that it illegally called millions of consumers on the national Do Not Call Registry.

The FTC alleges the firm illegally used phone numbers gathered from sweepstakes entry forms to contact consumers whose numbers are on the Registry.

The FTC’s complaint charges scooter manufacturer Electric Mobility Corporation and its owner Michael Flowers with making more than three million illegal sales calls since 2003 to consumers on the Do Not Call Registry who had entered the company’s “Win a Free Rascal” sweepstakes.

According to the FTC, in small print under the part of the sweepstakes form provided for the entrant’s phone number, Electric Mobility reminded consumers to list their numbers so the company could contact them if they were “the next lucky winner.”

Electric Mobility encourages consumers to enter its sweepstakes through direct mailing, newspapers, and television advertisements. The FTC charged that its conduct violated both the FTC Act and the Do Not Call provisions of the Telemarketing Sales Rule.

The FTC’s Telemarketing Sales Rule allows a company to call a consumer on the Do Not Call Registry for up to 18 months if it has an “established business relationship” with the consumer and he or she has not asked the firm to stop calling. However, under the Rule, a company may not rely on a completed sweepstakes entry form to establish a business relationship with a consumer.

In fact, the FTC consistently has said that simply obtaining a consumer’s phone number – as Electric Mobility did with its sweepstakes – does not establish a relationship that would exempt it from the Do Not Call rules.

The order settling the FTC’s charges bars Electric Mobility from using sweepstakes entries as the basis for claiming an established business relationship with any consumer. The order also includes monitoring and reporting requirements to ensure that Electric Mobility complies with its terms.

In addition, the order imposes civil penalties against both Electric Mobility and Flowers for their alleged violation of the FTC Act. Flowers will pay $100,000, and Electric Mobility is subject to a $2 million penalty, which is suspended based on its inability to pay. If Electric Mobility is found to have misrepresented its financial condition, the full penalty will become due immediately.