A marketing company known for its Snuggie infomercials settled state and federal claims that it stuck consumers with hidden charges that almost doubled the cost of the product, a blanket with sleeves, a New York official said.
The company lured consumers with attractive "buy one, get one free" offers but didn't adequately disclose that additional fees and handling charges almost erased the promise of the "free" item, New York Attorney General Eric Schneiderman said. Through confusing ordering processes, consumers sometimes were sold additional items which they didn't intend to buy, Schneiderman said.
Allstar Marketing Group, which also sells the Perfect Brownie Pan and Magic Mesh screen, agreed to pay $8 million to settle Federal Trade Commission and New York state probes, Mr. Schneiderman said. The company also agreed to change the ordering process and make it clearer, he said.
"This agreement returns money to thousands of consumers in New York and across the nation who believed they were buying items at the price advertised on television, but ended up with extra merchandise and hidden fees they didn't bargain for," Mr. Schneiderman said.
30 Million Sold
Allstar has sold more than 30 million Snuggies, which enjoy a cult-like following. Comedian Jimmy Fallon wore one during his late-night television show, and it has been featured in many internet videos, including some mocking the product and parodying its commercials.
There was no finding that the company broke any laws, Allstar said in a statement. The company said it will provide "multiple opportunities for customers to confirm their orders before placing them" and will "clarify ordering and return procedures."
"While we have always believed our processes complied with the law, we are proud to have successfully worked with the FTC and the NY AG to improve them and set new standards for transparency," Jennifer De Marco, general counsel at Allstar, said in the statement.
Marketers must clearly disclose all costs, including processing and handling fees, said Jessica Rich, director of the FTC's Bureau of Consumer Protection.
~ Bloomberg News ~