Snuggies marketer agrees to pay $8M to settle allegations of deceptive practices
A company that uses TV infomercials to sell Snuggies and other products has agreed to pay $8 million to settle allegations that it failed to disclose all shipping and handling fees that sometimes nearly doubled the price of the product.
The settlement order (PDF) requires the Allstar Marketing Group to clearly disclose the total number of products consumers are ordering, along with all fees and costs. The order also requires the company to get the express, informed consent of consumers before submitting their billing information for payment.
Besides Snuggies, the company’s products included the Perfect Brownie Pan and the Magic Mesh screen door, according to press releases by the Federal Trade Commission and the New York Attorney General’s office (here and here). Courthouse News Service and the Associated Press have stories.
An investigation found that the company used “buy one, get one” product offers to attract consumers, without adequately disclosing that consumers would be charged two, separate handling fees, according to the press release by the Attorney General’s office.
Consumers who responded to the TV pitches by calling an 800 number got an automated voice recognition system that collected billing information before asking how many products were being ordered, and without providing the total cost of the order, according to the FTC complaint (PDF). After the order was placed, consumers were subjected to a number of upsells, without disclosure of the total cost, the complaint says.
Some consumers who hung up after entering billing information said they were still charged, the complaint alleges.
Updated on March 8 to correct typo in fourth paragraph, as pointed out by commenter.