If you have a Snuggie stuffed away in a drawer, you may have been had, at least according to the Federal Trade Commission. Snuggie maker Allstar Marketing Group has settled with the FTC to the tune of $7.5 million over allegations that the as-seen-on-TV company levied unreasonable "processing and handling" fees—without disclosing them to the buyer. Courthouse News reports that the complaint (which a rep for Allstar explains was filed yesterday in order to enter the settlement agreement) used the Magic Mesh product as an example. The product lets "fresh air in and [keeps] annoying bugs out," but nowhere in the commercial for it is mention made of the $7.95 processing and handling fee. Further, almost all of Allstar's products are promoted as "buy-one-get-one-free"; buyers are obligated to get two, "meaning that the minimum 'processing and handling' fee that the Defendant charges is actually $15.90."
What that means for the buyer: Those $19.95 Magic Meshes will cost $35.85 plus tax, and "Defendant offers many of its other products in a similar manner." It's not exactly a new revelation: A 2010 New York Times article noted that Snuggie buyers had to get two, again for a total of $35.85, not $19.95, "though that actual price was never mentioned." In its claim, the FTC also alleged that the "Defendant's refund policy makes it virtually impossible for consumers to receive a full refund for products they never intended to purchase in the first instance," as the processing and handling fees are not refunded. In a press release, the FTC explains Allstar will have to make clear how many products a customer is ordering, and at what cost, before the customer is billed. Allstar will pay another $500,000 to the New York State Office of the Attorney General to settle a separate state case. The money can be used to refund defrauded customers; indeed, a rep for the FTC says "we’ll return millions of dollars to consumers that Allstar collected in undisclosed fees." (Read more FTC stories.)