An infomercial vendor has agreed to an $8 million settlement over claims that it used deceptive practices to overcharge customers.
Allstar Marketing Group, which sells items including the Snuggie and Perfect Brownie Pan, will be required to reform its advertising and ordering processes as part of the deal with the Federal Trade Commission and New York Attorney General's office. The settlement is part of a wider investigation into the direct marketing industry, according to the New York Attorney General's office.
"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," New York Attorney General Eric Schneiderman said in a release Thursday.
Allstar's ordering processes "have always been clearly disclosed to the consumer," the company said.
"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 a release.
Hundreds of consumers filed complaints about the company's practices, prompting Schneiderman's office to investigate. The probe found that, in some cases, customers paid much more than advertised or received products they didn't intend to order because of confusing ordering processes.
For instance, one customer who ordered a "Buy One, Get One" brownie pan, advertised at $19.95, ended up paying $105 and receiving six pans, the investigation found.
"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.