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Snuggie Maker Wrapped Up in Not-So-Cozy Advertising Fraud Charges Turns out Allstar's 'buy one, get one free' ad hook was allegedly cloaked in trickery. Now the as-seen-on-TV giant is forking over $8 million to settle charges that it hoodwinked customers.

By Kim Lachance Shandrow

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Allstar Products Group

Turns out Snuggie is a bit of a wet blanket. And, sorry, folks, Mom was right. Sometimes "buy one, get one free" isn't all it's cracked up to be.

Such is allegedly the case with Allstar Products Group, the direct marketing juggernaut that rocked our worlds with not only Snuggie, but a motley mix of other, equally kitschy tchotchkes. Think the Perfect Bacon Bowl, the Topsy Turvy Upside Down Tomato Planter and the Party in the Tub Bath Time Light Show. Yeah, that company.

In case you haven't heard, Allstar just snuggled up to paying a warm and toasty $7.5 million to the Federal Trade Commission (FTC) -- plus $500,000 to the New York State Attorney General's office -- to settle charges that it fleeced customers.

Related: French Court Bans Couple From Naming Their Baby 'Nutella,' Says It Is 'Against the Child's Interests'

The Hawthorne, New York-based direct sales company allegedly enticed customers with TV commercials that dangled misleading "buy one, get one free" deals. Instead, the FTC says Allstar swindled buyers, conning them into paying hidden processing and handling fees.

The settlement comes on the heels of a flurry of customer complaints. Some were duped into thinking they would receive two Allstar products for less than $10 each, but, after steep processing and handling fees were heaped on, they actually paid $35.85, according to the FTC.

Related: FTC Fines Two Health Apps That 'Lack Adequate Evidence to Support Their Claims'

Also, one customer complained that he accidentally ordered six $19.95 Perfect Brownie Pans for $105 when he only meant to buy two. The customer, who says he was never refunded, blamed his botched order on Allstar's "intentionally misleading" automated phone script, according to the Associated Press.

For its part, Allstar claims it wasn't aware it was breaking the law and, moving forward, it vows to be clearer about its pricing.

"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," Allstar general counsel Jennifer De Marco said in a statement.

Related: FTC Takes No Action Against Yelp Following Year-Long Investigation Into Review System

Allstar will also have to be more forthright about its refund policy, which, per the FTC complaint, "makes it virtually impossible for consumers to receive a full refund for products they never intended to purchase in the first instance."

Speaking of refunds, most of the $8 million Allstar has to fork over will be doled out to customers who had the "ultra-soft and cozy" wool pulled over their eyes.

Related: U.S. FTC Asking Apple About Health Data Protection

Kim Lachance Shandrow

Former West Coast Editor

Kim Lachance Shandrow is the former West Coast editor at Entrepreneur.com. Previously, she was a commerce columnist at Los Angeles CityBeat, a news producer at MSNBC and KNBC in Los Angeles and a frequent contributor to the Los Angeles Times. She has also written for Government Technology magazine, LA Yoga magazine, the Lowell Sun newspaper, HealthCentral.com, PsychCentral.com and the former U.S. Surgeon General, Dr. C. Everett Coop. Follow her on Twitter at @Lashandrow. You can also follow her on Facebook here

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