Scooter sales tactics draw complaints
The South Jersey maker of the Rascal has left a trail of accusations of arm-twisting and deceit.
For the elderly and disabled, the Rascal electric scooter can be a lifeline: a way to keep their mobility, and their independence.
But the South Jersey-based Electric Mobility Corp., which sells Rascals by sending salespeople to knock on doors, has also amassed a nationwide trail of complaints of high-pressure tactics, misleading sales pitches, and exploitation of the elderly and the vulnerable.
In complaint files from New Jersey to Oregon, customers said the company sold scooters costing as much as $6,499 to people who are terminally ill, are suffering from dementia, or are too frail to safely ride them. They sold one to Marvin Kaplan, 75, of Washington state, described in a doctor's letter as legally blind and unable to read the contract he signed.
"He can't see to do anything. It's never been out of the box," said Earnest Baker, a friend of Kaplan's who has power of attorney. "With his visual handicap, how is he going to steer this thing on his own? "
Many people say they are happy with their scooters, and Electric Mobility says that only about 5 percent of its customers file complaints and that many of those are unfounded.
The company says it works hard to prevent problems and to resolve them when they occur.
"Our data shows that almost every one of our customers is happy with our products and services," company president Michael J. Flowers said in a statement. He said in an interview that the company provides a "great service" to elderly and disabled consumers who would otherwise "require an ambulance to come get them out of their home. "
Electric Mobility generates steady numbers of consumer complaints. Since 2002, when the firm signed a compliance agreement with the New Jersey attorney general, promising to treat customers fairly, the state has received at least 358 additional complaints or requests for refunds. Other states got dozens more.
Hundreds of complaints
The Inquirer interviewed dozens of customers and salespeople, combed through court files and company documents, and examined more than 200 consumer complaints.
Those files state:
The company hired some sales reps with histories of scamming seniors. One was fired after she faked bank documents to make a scooter sale, the company said.
Customers said they were deceived by salespeople. Some said they were wrongly led to believe that Medicare would pay. Others said they were told they could test-drive the scooter for a few days if they left a deposit and signed paperwork, but later learned they had actually signed a purchase agreement.
The company, which depends on telemarketing and home sales to sell its scooters, has found a loophole in the Do Not Call law; when people on the list enter a Rascal sweepstakes, the company says that allows it to call.
Some customers with company-arranged financing said they learned only later that they were paying interest as high as 19.8 percent - a fact not disclosed by salespeople. The company says that interest rates were clearly shown on paperwork and that it makes no profit from those loans.
Company representatives say they have policies in place to make sure elderly customers aren't abused, acknowledging that their in-home sales approach has in some cases led to "exploitation. "
"It's a very, very risky business involving old people," said company attorney Lanny Davis, who specializes in public relations crisis management and served as counsel to President Bill Clinton during the Monica Lewinsky scandal.
Noting that the company operates under the 2002 New Jersey monitoring agreement, he called Electric Mobility "the most transparent, scrutinized company in the industry. "
Buoyed by a rising elderly population, that industry has shown explosive growth and is projected to continue expanding. Medicare payments for motorized wheelchairs and scooters, for example, increased from $289 million in 1999 to $845 million in 2002.
Electric Mobility isn't the only scooter company that has had problems with authorities. In April, the Justice Department filed suit against the Scooter Store, the nation's largest supplier of scooters and electric wheelchairs, for allegedly submitting fraudulent claims to Medicare for wheelchairs - a charge that the company denies.
Though other companies are selling thousands of scooters, no other scooter company has a door-to-door sales force as large as Electric Mobility's, with about 250 nationwide.
And Electric Mobility has generated an unusual number of consumer complaints.
The Better Business Bureau says it received 225 complaints nationally about Electric Mobility in the last three years. During that time, the Texas-based Scooter Store, with twice as many sales, has had 51.
Electric Mobility says it believes that many complaints are driven by grown children who want to inherit their parents' money.
"What we're getting from parents is, 'My son or my daughter says I'm demented because they don't want me to spend the money,' " Davis said. "We are a target for post-facto lying to get money back. "
To be sure, many Electric Mobility customers are happy.
Linda Homan, 63, bought her Rascal in 2001 after she had two knee replacements. For four years, she has been riding at the Centre County, Pa., fair and local antique shows.
"I'll tell you, I like it," said Homan, who regularly rides the scooter around her Centre Hall farm. "I don't think I'd trade it. "
Homan said her daughter recommended the heavy-duty, four-wheel Rascal 305 after comparing scooters on the Internet. She said she got a good price from the salesman, $3,600 for the scooter and accessories.
"It's a handy machine," Homan said.
Electric Mobility also provided The Inquirer with names and phone numbers of customers they said were randomly selected. "I was kind of pinned down in my house before getting the scooter," said Mildred Holcomb, 76, of Springfield, Mo. With the Rascal, she is able to get to church, tool around her yard, and even tend a strawberry patch.
Holcomb, who lives on a fixed income of $850 a month, said she financed the $3,000 scooter through the company at an interest rate of about 18 percent. She pays $66 a month. "It takes most of what I've got extra, but it's worth it," she said.
Local success story
Electric Mobility is a homegrown company. Headquartered in Sewell, Gloucester County, the firm was started by Flowers' father, who came up with the idea to sell motorized bicycles during the 1970s oil crisis.
Flowers joined his father after graduating from Rutgers University. The younger Flowers designed the company's first electric scooter - a three-wheeler that changed the "mobility" market because it didn't look like a wheelchair.
Today, the company has more than $100 million in annual revenue and is one of the largest distributors of electric scooters in the country.
The Rascal became an icon of popular culture after a cameo in a 1997 Seinfeld episode in which character George Costanza pretended he was disabled.
Complaints to the New Jersey Attorney General's Office began to pile up in 1998, shortly after the company hired Mark Ostrov as a sales consultant.
Ostrov, from San Diego, was paid bonuses for boosting profits and expanding the company's sales force.
Under Ostrov, the company shifted away from selling scooters through retail stores, where Rascals had to compete with lower-cost models, to an emphasis on door-to-door sales.
Ostrov ended up in federal prison for fraud charges unrelated to Electric Mobility, cheating elderly customers who paid up to $3,600 for adjustable beds that were never delivered. Electric Mobility fired him three months after he entered guilty plea in June 2000.
Company sales reps still use the aggressive strategy he preached. According to current and former company salespeople, Electric Mobility runs a high-pressure sales machine that appeals to the elderly's fears about becoming shut-ins.
"When you have someone who has been sitting for two years watching TV, never going out, they're buying on emotion," said Scott O. Sentenn, who recently retired as an Electric Mobility sales manager in the Northwest.
"They're thinking, 'This is easy, and I can get outside and do what I used to do. ' When the dust settles, they see 19.8 percent interest," he said.
Electric Mobility lawyer Davis said the company considers his comments to be that of a disgruntled former employee.
As for appealing to emotion, Davis said the Rascal gives "a lot of emotion and pleasure and freedom to otherwise imprisoned old people. "
"We do not exploit, mislead, coerce or do anything that isn't in their best interest," he said.
Renee Lita Borstad, director of the Burlington County Office of Consumer Affairs, said complaint files she has reviewed suggest Rascal's customers are squeezed by salespeople during long in-home presentations.
"The bottom line is, they're taking advantage of the elderly," Borstad said.
In the case of Kaplan, the legally blind man, he couldn't use the scooter and didn't understand that he was actually buying it, according to his friend Baker. Kaplan, who is now in a nursing home, has mild dementia, medical records show.
The company said that it had no evidence he was blind at the time of the sale and that Kaplan didn't complain about anything in a routine follow-up call.
The lure of sweepstakes
Many seniors are introduced to the company through the Rascal sweepstakes. The firm runs full-page ads in the VFW and AARP magazines, featuring pictures of smiling silver-haired seniors riding shiny new Rascals. The ads include an entry form to win a free scooter.
The company gives away one free scooter a month; the odds of winning are about one in a million. The sweepstakes forms generate millions of leads for the company's telemarketers, who relentlessly pitch Rascals from the company's second-floor phone banks.
As seasoned salespeople called "whisperers" listen in and offer suggestions, telemarketers work to convince the sweepstakes entrants to agree to a home demonstration by a salesperson.
They're trained to act "empathetic. " One 2004 training document suggests saying: "It sounds like you really have trouble with long distances. "
"Now they are reliving their pain and problems," the document explains. "That's a good thing for them and us. "
"I think sometimes the telemarketers maybe push a little too much, to get the person to have us come out," said Randy Dungleman, who said he's been selling Rascals in Florida for six years. He said the telemarketers are pressured to meet quotas.
"They are going to book whatever they can book as long as the person doesn't hang up on them. "
That includes setting up sales calls with people who are too ill to ride a scooter or too poor to buy one, several salespeople said. They said they've occasionally been sent to knock on doors of blind or demented people.
Davis said telemarketers carefully follow a script designed to make sure that a person can afford a scooter and is physically capable of handling one.
Salespeople show up with tins of cookies and a pitch aimed at closing the deal before they leave. The company says nearly all of the 17,000 "in-home" sales each year are made during the first visit.
Many complaints cite unrelenting pressure in those visits, which sometimes last hours.
Gladys W. Bregler, 78, of Pittsgrove, Salem County, said a salesman spent seven hours pushing her into buying a $2,000 scooter.
"I was beginning to feel faint . . . still saying 'No,' " Bregler wrote in a 2003 complaint to the Gloucester County Department of Consumer Protection. "From 10 a.m. till 5:30 p.m., I was stuck in my chair without anything to eat or time to go to the bathroom. " She got her money back.
The company said the sales rep had no violations on record. The sales call actually lasted 5 1/2 hours, the company said.
Electric Mobility doesn't publish prices, so people don't learn the cost until salespeople are in their homes.
Company president Flowers said he withholds prices because his Rascals, although often more expensive, are of much higher quality.
"We're afraid we're going to have people that say, 'That's a lot more than I can find on the Internet or than I can find from the local dealer. ' They're not comparing apples to apples. " He said the company will start publishing prices on its Web site next year.
Consumer advocates say that not giving prices could hurt buyers.
"All I hear is alarm bells going off in my head," said Gail Shearer, a spokeswoman for Consumer Union, a national advocacy group.
"Ignorance leads to confusion," she said, adding that with the elderly, this can bring "all sorts of problems. "
One key strategy used by the company is a series of "discounts. " The sales reps offer $500 off if customers "buy today. " If the customer balks, the sales rep calls the main office, and an executive known as a "closer" may offer additional price breaks.
Neal Humiston, 82, of Orting, Wash., thinks he got snookered, saying he was lured in by a series of discounts in what he characterized as "a typical used-car salesman technique. " Humiston paid $5,500 for a scooter after the salesman offered $1,700 off.
In some cases, sales representatives said, closers apply so much pressure that the customer ends up crying.
"They would press hard in their questioning of potential customers, asking, 'Don't you have a credit card?,' " said Peter McQueen, a former Rascal salesman from North Carolina.
There's persistence, not pressure, Davis said.
"We think that asking and re-asking a second or third time is a good thing and not a bad thing, and to us, that's not unreasonable pressure," Davis said.
"We're going to make mistakes"
When elderly consumers worry about a stranger coming to their home, telemarketers are instructed to reassure them that the reps "go through an extensive background check to ensure your safety. "
But the company's criminal background checks can be hit-or-miss. "We're going to make mistakes," said Davis.
One such mistake was Carolyn Copp-Kinne, whose history of scamming sales clients shows up in a Google search.
In 1998, Maine authorities took away her insurance sales license for repeatedly lying to clients about policies she sold. Regulators posted the case on their Web site.
Electric Mobility hired Copp-Kinne in 2003. Her customers in Maine filed 12 complaints, and the company made refunds in six cases.
She was fired last year for allegedly faking bank paperwork that was supposed to qualify one scooter customer for credit, the company said.
The company never reported the incident to authorities.
After being informed by The Inquirer of the firing, the Maine Attorney General's Office said it would seek information from the company and consider criminal action. Copp-Kinne, of Maine, did not return phone calls.
Another company salesman with a troubled history was Edward O. Fiskland. Sued by his customers in connection with a securities scheme in the 1990s, he was hired to sell Rascals in 2000.
Fiskland left the company after just one year. Last year, police in Spokane, Wash., charged Fiskland with allegedly bilking $200,000 from one of his former Rascal customers. The victim died, and the case never went to trial.
After Fiskland left Electric Mobility, he worked for a company that installed scooter lifts for Rascals. While in that job, he allegedly convinced Rascal customer Ambrose Bertsch to lend him $10,000, then never paid it back. Bertsch suffered from cancer and agreed to the loan from a hospital bed, according to his son. He died last year at age 86.
"The man is going to fry in hell for the things that he did here," said Bertsch's son Tom.
In a March 2004 response to Bertsch's complaint, Electric Mobility called Fiskland's actions "reprehensible and despicable," but said it was "not responsible for the hiring practices" of the lift installers.
Davis, the Electric Mobility attorney, said the company tries hard to screen its sales staff, but said there's bound to be a percentage of "bad apples" who slip into the ranks. "As soon as we find them out, they're gone," Davis said.
He pointed out that company sales reps are independent contractors, not employees, who are sent out after three days of training.
A report about sales practices at Electric Mobility was aired on the television show Inside Edition in 2001. A year later, saying it had received 169 complaints over four years, the New Jersey Attorney General's Office charged the firm $220,000 for costs. The firm signed a 20-page agreement pledging to do business ethically.
But complaints have continued. Besides the 358 forwarded to New Jersey regulators from unhappy customers throughout the country, customers in other states have complained to their own attorneys general. Since 2003, there have been 31 complaints in Ohio, about two dozen in Pennsylvania, 17 from Illinois, and about a dozen each from Oregon and Washington.
Federal regulators, too, are interested in Electric Mobility. Tim Hill, director of financial management for Medicare, said he wants his agency's inspector general to review whether the company's Rascal sweepstakes "skirt the rules" for Medicare.
He expressed concerns about the low odds of winning, and that people who thought they were simply entering a contest were suddenly getting solicitations for a product sometimes covered by Medicare. Electric Mobility's advertisements prominently mention that Medicare might pay for the scooters.
Davis said that Electric Mobility welcomes scrutiny because it has nothing to hide and that the company complies with all Medicare rules.
Many of Electric Mobility's "complaints" aren't complaints at all, Davis said. Sometimes, customers ask for refunds because they become sick or go into a nursing home and no longer can ride their Rascals.
Company president Flowers can be emotional about his Rascals and his customers.
In an interview last month, he began crying as he talked about a 1999 sale to a woman with Alzheimer's. The customer's daughter made her return it.
"After the scooter came back, the mother called me personally," Flowers said, tears dripping onto his shirt. "She was crying, 'I want my Rascal back. ' That's the kind of stuff we get hit with. "
He said the company knew the woman had Alzheimer's, and sold her the $4,000 scooter only because her husband pledged that he would supervise her. The woman, now dead, was 79 at the time.
Flowers said the daughter rarely visited her mother and suggested she cared only about inheriting money.
The daughter is Patricia L. Paradies, of Dover, Pa. She called Flowers' story "baloney. "
In a complaint, Paradies said her mother's illness prevented her from "thinking straight. "
"She didn't even know she had a scooter," Paradies said.