Allstar Marketing has settled with the FTC for $8 million dollars for its false and deceptive marketing of products via its “buy-one-get-one-free” promotions and their “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.
Based on this alleged conduct, the FTC’s complaint charges Allstar with two violations of the FTC Act and three violations of the agency’s Telemarketing Sales Rule (TSR), including the following:
- Billing consumers without their express informed consent;
- Failing to make adequate disclosures about the total number and cost of products before billing consumers;
- In connection with the up-selling of goods and services, violating the TSR by failing to disclose material information about the total cost of the products and that the purpose of the call is to sell goods or services ; and
- During telemarketing, illegally billing consumers without first getting their consent.
Earlier this year a case was settled against Lindsey Duncan for $9 million alleging he and his companies deceived people by promising they could “drop pounds” fast without diet or exercise — just by using their green coffee extract products.
The FTC and the CFPB are playing Whack-A-Mole with these cases after all these years after trying the Operation Choke Point approach. It appear to me that processors for those selling fraudulently advertised products are still treading a narrow line and that underwriters must understand the marketing as well as the product of their merchants.