NASHVILLE – Tennessee Attorney General Herbert H. Slatery III has filed a civil enforcement complaint under the Tennessee Consumer Protection Act (TCPA) against The Rustic Flag Company (RFC) and its owner, Justin Scott, for engaging in deceptive and unfair trade practices.
The state’s complaint alleges that defendants received payments from thousands of customers for products that were never provided, failed to respond to customers’ inquiries related to the manufacturing and shipping of purchased products, and misrepresented the amount of time it would take for customers to receive their orders.
“They had a good product that was in high demand,” said Slatery. “But The Rustic Flag Company did not deliver on what it promised customers and violated state law.”
Scott started Rustic Flag Company in 2015 selling homemade wooden flags out of his basement in Trenton. As the products became more popular, Scott and his wife Donna purchased a warehouse in 2017 and took orders online.
The wooden flags varied in price from $100 to $400 depending on size and style. Custom flags could cost up to $4,000.
By 2018 defendants were unable to keep up with the number of orders and were behind schedule. However, many customers say they were not informed that their orders would be delayed. The Tennessee Division of Consumer Affairs received more than 1,100 complaints and the Better Business Bureau received over 2,100.
In the complaint, the state details scant and haphazard record keeping at RFC and misuse of company funds for personal benefit by defendants. Some of those expenditures include:
- Defendants used a significant portion of a capital loan for RFC from Shopify to pay off the balance ($215,000) on a home loan.
- Approximately $26,000 for a Ford Mustang.
- Approximately $25,000 landscaping on personal property.
- Approximately $20,000 down payment on a Chevrolet Corvette.
- Approximately $1,100 monthly payment on a Cadillac Escalade.
- Approximately $3,400 each for two four-wheelers.
The complaint also states that the Scotts started RFC Tactical, their second business, in July of 2016 using at least $40,000 from The Rustic Flag Company’s funds. RFC Tactical, located in Milan, was a retail store that sold outdoor clothing and gear, firearms, ammunition, and other related items. It was a general partnership for which Justin and Donna Scott were the sole partners.
The complaint states that besides using The Rustic Flag Company funds for the initial investment, defendants regularly transferred funds back and forth between their two companies without keeping records of these transactions. RFC Tactical officially closed in May 2019, and its inventory was sold for $120,000 – money that was immediately spent by defendants to pay off outstanding debts.
Additionally, the complaint states that the defendants accumulated large amounts of debt, including an estimated $200,000 to Shopify, $8,500 to their accountant, $23,000-$25,000 to the IRS, $32,000 to the United Postal Service, and $3,000 to City Lumber Company. The defendants have a judgment of approximately $60,000 against them in Gibson County for failure to pay rent.
The state is requesting a permanent injunction to prevent future violations of the TCPA by defendants, an injunction against further disposition by defendants of assets that lawfully belong to the state, freezing assets, appointing a receiver to take charge of the assets, and granting any other relief the circumstances may require pursuant to TCPA including refund of monies paid and disgorgement of ill-gotten gains.
The civil enforcement complaint was filed in circuit court of Davidson County for the 20th Judicial District at Nashville.