Snuggie blanket (Photo : Wikipedia)
Allstar, the TV infomercial seller of products such as the Snuggie blanket and , will pay $8 million to settle charges by the Attorney General of New York that it misled and overcharged its customers. Allstar allegedly used deception and fraud in its promotion of a "buy one, get one" offer on TV commercials, by not mentioning that two processing and handling fees would be charged.
Allstar's settlement was also with the Federal Trade Commission, and is part of a probe into the direct marketing industry, according to CNBC. It is now required to cease using advertising that is untruthful or confusing.
Allstar also allegedly used a confusing process for ordering that included several up-sell offers. Customers were not always given a chance to review or change their order prior to it being processed.
After hundreds of consumers complained to the Attorney General, he began to investigate Allstar. In certain cases the fees charged were almost twice the price of the special offer.
One customer was unaware that he had bought six Perfect Brownie Pans instead of two, for $105. He complained that the automated telephone recording he heard was purposefully confusing, but he was unable to receive a full refund.
Allstar will be required to pay $8 million, which will primarily be paid to cheated consumers, according to WQUD. The Attorney General's office will also receive a penalty of about $.5 million.
An attorney of Allstar claimed that the company thought it was adhering to the law. However, it is pleased that the issue has been resolved, it can improve its business practices, and it can set "new standards for transparency."
Meanwhile, a director at the FTC warned that marketers, must clearly reveal all costs. That includes all fees "they think up."
