Research has shown that shoppers may be more likely to purchase a particular product if they know that some of their money is going to a worthy cause, and some folks will take advantage of this tendency to trick people into purchasing thousands of dollars in household cleaning products under the guise of helping the disabled.
The Federal Trade Commission on Thursday announced that it had reached a settlement agreement with Adli Dasuqi and his companies, American Handicapped Inc. and American Handicapped and Disadvantaged Workers Inc. to resolve charges that the operation tricked people into buying products under the pretext they would help others.
According to the complaint [PDF], telemarketers working for the company cold-called individuals to sell them light bulbs, trash bags, and cleaning products.
The callers, who allegedly claimed to represent a charitable organization that employed disabled persons, would also tell potential customers that if they made a charitable donation they would receive a free gift in exchange.
“Defendants’ telemarketers appeal to consumers’ sense of charity by misrepresenting that consumers’ purchases will help handicapped or disabled people, including by misrepresenting directly or by implication that most wages paid by the [company] go to handicapped or disabled employees or that the person soliciting is handicapped or disabled,” the complaint states.
In reality, the FTC claims the company only paid a small portion of the total wages to handicapped or disabled employees, and the person making the call is usually not handicapped or disabled.
After making purchases, customers said the invoices they received were substantially higher than similar products at retail stores. For example, the company charged $30 for two light bulbs and $100 for 60 15-gallon trash bags.
In some cases, consumers tell the FTC that they received merchandise and invoices without their consent. Once this happened, they were contacted by the company, which claimed that the shopper owed a payment for the unordered merchandise.
Despite receiving notice of complaints filed by consumers, Dasuqi failed to stop the scheme, according to the FTC.
Under the company’s settlement, American Handicapped Inc., American Handicapped and Disadvantaged Workers Inc., and Dasuqi are banned from selling anything for the purported benefit of disabled persons, are prohibited from mischaracterizing their employees and their charity involvement, making untrue claims that anyone has ordered and agreed to pay for products, and barred from misrepresenting material facts about any good or service.
The order also imposes a $4 million judgment against the companies, but it was suspended due to inability to pay. Should the defendants fail to adhere to the settlement, the full judgment will be due.
by Ashlee Kieler via Consumerist
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