That practice is legal, but only if the transmitter portion of the radio is only capable of transmitting on amateur frequencies. It's a result of the fact that there is no certification required or available for amateur transmitters, but all scanning receivers are required to be certified. Look up the FCC certification of any modern 2m transceiver from Yaesu/Icom/Kenwood, and you'll see they're all certified as scanning receivers, even though they're marketed as transceivers, and may even say "transceiver" on the front. Where Rugged Radios went wrong was in marketing a transceiver capable of transmitting on services that require certified transmitters (virtually any service other than Amateur) without getting the radio certified for the service(s) on which it could transmit. Most Baofengs I've seen also violate this rule. They'll transmit on any frequency they're programmed for, but they're either uncertified or else only certified for Part 90.