‘But wait…there’s more’ results in unexpected charges

via ‘But wait…there’s more’ results in unexpected charges on clarionledger.com on 3/9/2015

Have you ever wondered how a company could possibly make money by giving you two items when you buy one? The “but wait…there’s more!” tag has become a familiar icon of marketing “As Seen on TV” products; a staple of infomercials and cute ads for innovative products like the Snuggie, Perfect Tortilla and Magic Mesh door covers promise they’ll “double your order” if you order one item.

Apparently, it is too good to be true. The FTC settled last week with Allstar Marketing Group, which sold products such as Snuggies and the Magic Mesh door cover. The company has agreed to pay $7.5 million to the Federal Trade Commission for consumer restitution to settle FTC charges in connection with its “buy-one-get-one-free” promotions, and the New York Attorney General’s office will soon follow. The company is alleged to have charged unwitting consumers for merchandise they didn’t order and costs they didn’t expect.

“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,” noted New York Attorney General Eric T. Schneiderman. “The settlement also brings much needed reforms to a major firm in the direct marketing industry. Those who use small print and hidden fees to inflate charges to unwitting consumers must be held accountable.”

Since at least 1999, Allstar has pitched its products using TV commercials. They include the Magic Mesh, Cat’s Meow, Roto Punch, Perfect Tortilla, Forever Comfy and Snuggies, all with the “Buy one, get one free” promise.

“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.”

In a recent commercial for Magic Mesh, for example, according to the FTC release, the company promised that it would “double the offer” for consumers, if they just paid “processing and handling fees.” While consumers were led to believe that they would then be getting two $19.95 products for “less than $10 each,” in fact, the total cost with the undisclosed $7.95″processing and handling” fees jumped from the advertised price of $19.95 to $35.85, according to the complaint.

As alleged in the FTC’s complaint, consumers who called Allstar were often immediately instructed to enter their personal and billing information, and were charged for at least one “set” of products, based on the “buy-one-get-one-free” offer, before they had a chance to indicate how many products they wanted to buy. Because the sales pitch was often confusing, some consumers purchased more “sets” than they actually wanted.

“Allstar then attempted to upsell consumers additional products via automated voice prompts that requested the consumer accept the offer,” the agency reported. “Many times, the only way a consumer could decline the offer was to say nothing. At the end of the calls, Allstar sometimes routed consumers to other third-party sellers who made additional sales pitches. Once all of the offers ended, consumers were not told the total number of items they’d ‘agreed’ to buy, or the total amount they would be billed, according to the complaint. The Commission has alleged that Allstar even charged those consumers who hung up mid-call, not intending to complete a sale.

According to the FTC’s complaint, consumers who opted to buy Allstars’ products online faced similar problems, including separate “processing and handling” fees which were only disclosed in very fine print at the bottom of the page, and a “barrage” of upsell offers. Consumers were not provided with the total price of their purchases, and despite a “30 day money-back guarantee” (less processing and handling fees) full refunds were difficult for consumers to obtain.

So while It may be tempting to convince yourself you can really use two “Perfect Tortilla” devices, it may be better to stop and think before you throw away your hard-earned money.