Anne Bucher  |  March 6, 2015

Category: Consumer News

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snuggie settlementThis week, the Federal Trade Commission announced that Allstar Marketing Group LLC, the direct marketing company responsible for selling Snuggies and other “As Seen on TV” products, will pay $8 million as part of a class action settlement that will provide refunds to consumers. The settlement will resolve FTC charges that Allstar duped consumers with its “buy one get one free” promotions.

“Since at least 1999, Allstar has been in the direct marketing business, using televised commercials to sell a host of products,” according to the FTC lawsuit. “Over the years, Allstar has sold many products including Magic Mesh, Cat’s Meow, Roto Punch, Perfect Tortilla, Forever Comfy, and Snuggies.”

According to the FTC, nearly all of the products offered for purchase by Allstar include a “buy one get one free” promotion. However, Allstar fails to disclose that it charges a separate “processing and handling” fee for each product purchased, causing consumers to pay nearly twice the advertised cost of the products in some cases.

For example, the narrator in a commercial for Magic Mesh says the product is available for “just $19.95,” but if a consumer calls now, the company will “double the offer, just pay separate processing fees.” The narrator stresses that consumers will “get two Magic Mesh curtains for $19.95, that’s less than $10 each,” according to the FTC lawsuit.

However, the narrator in the Magic Mesh commercial does not disclose that Allstar charges a $7.95 “processing and handling” fee for each product. Further, the narrator does not inform consumers that they can decline the second “free” Magic Mesh product. Therefore, consumers who choose the “buy one get one free” deal are subjected to a total of $15.90 in processing fees, which nearly doubles the advertised cost of Magic Mesh from $19.95 to $35.85. According to the FTC lawsuit, many of Allstar’s other products are advertised in a similar manner.

At the end of the commercial, viewers are prompted to place orders by phone or online. Customers who place a call to the toll-free number are not given the option to speak with a representative, but are instead almost immediately prompted to enter their name, address and payment information. According to the FTC, Allstar collects this information before customers even indicate how many products they intend to purchase.

“Defendant charges every consumer who enters billing information, even if those consumers abort the telephone call without completing their order,” the FTC lawsuit says. “Consumers have complained that Defendant has charged them even after consumers have interrupted the telephone call by hanging up. These consumers never intended to complete a sale and would have had no way of canceling the transaction even if they had understood that Defendant was going to charge them.”

The online ordering process is similarly deceptive, the FTC alleges. The only notification about the processing and handling fee is located in fine print at the bottom of the page. As with the telephone ordering process, there is no clear way to change or cancel their orders. Further, customers are faced with a confusing series of additional offers after they have already submitted their billing information. After being shown multiple upsell offers, consumers are finally shown the “grand total,” which does not include sales tax.

“This is the first and only time that Defendant displays the complete order and the total (estimated) charge,” the FTC says. “At this point in the transaction, however, there is no way to edit, or cancel, the transaction online. Defendants’ online ordering process hides the true cost of Defendant’s products and upsells, causing consumers to incur charges they never authorized.”

In addition to the $7.5 million that will go toward customer restitution, Allstar will pay $500,000 to the New York State Office of the Attorney General for penalties, costs and fees in a separate consumer fraud settlement.

The Snuggie Deceptive Billing Class Action Lawsuit is Federal Trade Commission v. Allstar Marketing Group LLC, Case No. 1:15-cv-01945, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

75 thoughts onSnuggie Marketer to Pay $8M to Settle Deceptive Billing Allegations

  1. Pauletta James says:

    I purchased 3

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