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Do Not Call's unintended consequence

Tidewater president Clark said the business was growing, evolving into something so big that she couldn’t sustain it.

JAMES BORCHUCK | Times

Tidewater president Clark said the business was growing, evolving into something so big that she couldn’t sustain it.

Nothing raises the ire of consumers like the unwanted evening call from a telemarketer.

After a long day at the office and with the kids screaming and complaining of hunger pangs, the last thing people want is an offer to buy something they don't need (and these days can't afford).

Congress aimed to swat the annoyance like a fly with the Do Not Call Registry that became law in February 2008. But just as with many laws, there have been unintended consequences — and unexpected moves by some telemarketers.

Among the most notable troubles were those caused by the now infamous free gas voucher program that Largo telemarketing company Tidewater Marketing Global Consultants passed on to unwitting consumers in the United States, Canada and Puerto Rico.

Tidewater, just as many telemarketing firms, did not become extinct with the Do Not Call Registry. It simply evolved.

Hundreds of thousands of consumers lined up for free gas vouchers, many of them people who would have ignored Tidewater Marketing's pitch during an evening phone call. They had received the vouchers from retailers — Tire Kingdom, Sound Advice, Ashley Furniture, Bob's Carpet Mart, the New Port Richey Hyundai dealer — which distributed them as incentives for purchases or even just to visit the store.

It was perhaps a brilliant stroke by Tidewater president Crystal Clark and her business because in this incarnation, the retailers became the face of her company's program, rather than a telephone number flashing on the caller ID.

Retailers bought gas vouchers from Tidewater in denominations as high as $500, though they themselves often paid as little as $7. To collect the promised voucher, customers had to contact Tidewater and provide personal information. In other words, they voluntarily — if inadvertently and unknowingly — were giving Tidewater, the telemarketer, permission to skirt the Do Not Call list and to market to them. Consumers may have thought they were dealing with a company from which they bought furniture or tires or carpet, but in reality they were communicating directly with a telemarketer.

For all that, consumers should not harbor hopes of getting their promised money. Tidewater had $300 in the bank and $10 million in debts to consumers when the state shut it down and took it over.

"When any law or new regulation is passed, basically it's an opportunity for (the telemarketers) to find a way around it or find new perspective," said Deborah Berry of the Pinellas County Department of Justice and Consumer Services.

"We've seen a shift from calling senior citizens to calling people with poor credit histories for advance fee credit cards … to government grants scams and now the e-mails are being sent announcing the Obama stimulus rebate."

The gas voucher program offered a whole new marketing approach for the telemarketing business at the most ideal of times (from the telemarketer's viewpoint). Tidewater's gas voucher program took off when gas prices surpassed the $4 mark.

After receiving the voucher from a retailer, consumers then paid a $5 registration fee with Tidewater. The company required consumers to send in $100 worth of gas receipts each month and, in turn, was supposed to issue a $25 gift card for gas until the total value of the voucher was reached.

Apparently, a great deal for the consumer — and even better for retailers. With the economy slumping fast, retailers needed a tool to lure consumers back into the stores and the gas voucher program seemed ideal. But before handing the vouchers to consumers, the retailers did not seriously enough consider what kind of operation Tidewater was.

Tidewater Marketing and its president already had a history with the Pinellas consumer agency and with the Better Business Bureau.

Clark's operation had run a program that offered to help consumers obtain government grants and loans. It was terminated after the Federal Trade Commission cracked down on similar operations for fraud. Clark then began pushing the gas vouchers. (Clark now has nearly 3,000 complaints at the BBB.)

Some say the retailers are culpable in this latest debacle.

"When they create these kinds of offers for their customers, they have to take responsibility," Kevin Keller, a marketing expert at the Tuck School of Business at Dartmouth, said about the retailers.

Collen Hegge, an Ohio lawyer, has filed a class action lawsuit against Big O Tires (a sister company to Tire Kingdom) over the gas voucher flap.

Big O does not comment about the ongoing litigation, but a Tire Kingdom spokesman says they, just as the consumers, were Tidewater's victim.

During an interview last fall, Clark, who also is facing a drug trafficking charge, accused of the illegal sale of oxycodone to an undercover police detective, said her business was "not a scam." She said the company simply was having computer and phone problems that were delaying distribution of the gas cards consumers were promised.

Clark even gave the St. Petersburg Times a tour of a new 10,000-square-foot facility she was moving into to carry her business to a new level. She said the business was growing, evolving into something so big that she couldn't sustain it.

"With this type business, they're spending the money as fast as they're getting it in a lot of times," said Berry, the Pinellas Justice and Consumer Services official. "Out of the telemarketing rooms they may be running multiple types of businesses, from selling magazines to the gas cards."

They're far more prepared, Berry notes, than those of us on the receiving end of the telemarketing plan. They use multiple Web sites, company names and officers, "to confuse people who they really are," Berry said.

And they generally are prepared for whatever lawmakers might throw at them.

"Usually," Berry said, "they have something else in the works all along."

Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332.

Do Not Call's unintended consequence 03/21/09 [Last modified: Saturday, March 21, 2009 4:30am]

    

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