Scam of the day – March 10, 2015 – Maker of Snuggies to pay 7.5 million dollars to FTC

Direct marketer, Allstar Marketing Group, LLC, the maker of such familiar “as seen on TV” products as the Magic Mesh door cover, Cat’s Meow, Roto Punch, Perfect Tortilla, Forever Comfy and, of course, the famous Snuggie, a blanket with sleeves, agreed to pay 7.5 million dollars to the FTC to settle charges related to its deceptive and confusing “buy-one-get-one-free” promotions.  All marketers are required to clearly disclose all costs involved with the purchase of their products including processing fees and handling fees.  According to the FTC, Allstar had been cheating consumers since 1999 using a confusing “buy-one-get-one-free” promotion than failed to clearly disclose the real cost whereby a consumer would not be aware of undisclosed processing and handling fees that would considerably raise the cost of the purchase.  In addition, the FTC alleged that Allstar would use misleading automated voice prompts when customers purchased items by phone that would result in the consumers not only paying more than they realized for products, but even charge consumers who hung up during the call thinking they were not making a purchase.

TIPS

The FTC and the New York Attorney General’s office worked jointly on this matter.  The New York Attorney General’s office will receive an additional $500,000 as part of the settlement in addition to the 7.5 million dollars paid to the FTC.  The funds paid to the FTC will be refunded to defrauded consumers.  As soon as details are finalized in regard to how the refunds will be processed, I will report that information to you.

In addition to their television advertising, Allstar also used a website to sell its products online.  The same fraudulent tactics were used although in some instances, the charges were actually disclosed in fine print at the bottom of the page.  As I always say, there is little that is fine about fine print, but it is critical that you make sure you understand what is in the fine print before ever buying a product or service.