‘Snuggie’ Marketers Ordered to Refund $8 Million
That Snuggie might keep you even warmer now that you can get its price refunded.
Snuggie, the popular blanket-with-sleeves, promised customers, “Buy one, get one free!”
The people offering that deal forgot to mention that “free” actually meant $15.90—and the full price was only $19.95.
The Federal Trade Commission (FTC) noticed—and has ordered Allstar Marketing Group, the company behind the ads, to refund $7.5 million to its customers. The New York Attorney General’s Office is assessing a separate $500,000 fine.
Actually, the FTC only filed a complaint. A court reviewed it and order Allstar to set up a $7.5 million fund to make reparations.
A Popular Product but an Unpopular Billing System
According to ABC News, the company sold more than 30 million Snuggies in the first five years they were on the market, collecting more than $500 million.
The FTC reached a settlement with the New York-based marketing company after alleging the company violated the Telemarketing and Consumer Fraud and Abuse Prevention Act.
“Marketers must clearly disclose all costs. That includes processing fees, handling fees, and any other fees they think up,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Working with the New York Attorney General, we’ll return millions of dollars to consumers that Allstar collected in undisclosed fees.”
Buy One, Get Charged for Two
AllStar Marketing hit it big with the Snuggie, but it sold a lot of products—and used the same deceptive tactics in every ad.
The same New York-based company also sold “Magic Mesh” screen doors, the Forever Comfy chair cushions, the Cat’s Meow, Roto Punch, and the Perfect Tortilla. The scripts for the payment portions for all these products were nearly identical, the FTC reported.
Both ads claimed, “Call now” and the company would send a second item free of charge—“Just pay separate processing and handling fees,” the FTC reported.
The ads claimed that you could get two Snuggies (or screen doors) for the price of one—“That’s less than $10 each.”
Here’s the catch: if you did call, you were automatically ordering two of the item—whether you wanted two or not. And those “separate processing and handling fees” added up to $15.90, so the total cost wasn’t “less than $10 each.”
The actual cost charged to your credit card was $35.85, or $17. 43 per item.
Full Refund Costs Full Price
That’s just the start.
When people tried to return the unwanted merchandise (many people did not realize they had ordered two, or would not have ordered two had they known the full price) they tried to avail themselves of Allstar’s “30 day money-back guarantee (less p&h).”
That’s right—return the merchandise within 30 days for a full refund—less shipping, which the customer had to pay, and a handling fee, which turned out to be half the cost of the original purchase.
At that point, it was cheaper to keep the unwanted, overpriced merchandise than to send it back.
The FTC alleged that Allstar illegally billed consumers without their express consent, and failed to adequately disclose the terms of the offer.
Allstar Marketing Group started sending out refund checks on March 12—218,254 refund checks, each averaging $33.14, totaling more than $7.2 million, ABC News reported.
Don’t wait—cash those checks now. The checks expire in 60 days.