Tristar Products, Inc. (Tristar) and Product Trend, LLC (Product Trend) sell products, such as Tristar’s “Genie Bra” or Product Trend’s “Total Pillow,” directly to consumers through television and internet advertising. Both companies recently settled charges brought by the New York Attorney General which alleged that the companies’ advertising mislead consumers by, among other things, failing to disclose processing and handling fees for “free” products.

Specifically, the Attorney General alleged that both Tristar and Product Trend misled consumers with their “Buy One, Get One” offers, which failed to disclose that consumers would be charged a separate processing and handling fee for each item. The Attorney General also alleged that the direct marketers failed to disclose the amount of those processing fees. Additionally, the AG’s investigation found that the direct marketers’ automated ordering process was confusing, included numerous “upsell” offers, and did not give consumers the opportunity to review and edit their orders before processing.

The announced settlement requires both Tristar and Product Trend to reform their advertising, marketing, and customer service practices. The direct marketers must clearly and conspicuously disclose the amount of any processing and handling fee for a second item in a “Buy One, Get One” offer. Additionally, the direct marketers must provide consumers with the opportunity to confirm the details of their online orders before the order is processed. Both companies must also ensure that their service lines are adequately staffed so as not to subject customers to long hold times. This settlement is similar to that which the New York Attorney General and the FTC reached with Allstar Marketing Group last spring.

TIP: Any and all material terms of a “free” offer, including any shipping and handling or other fees, must be clearly and conspicuously disclosed at the outset of the offer. Direct marketers accepting calls from consumers in response to an advertisement will be subject to the federal Telemarketing Sales Rule if they engage in an “upsell,” which is defined as the solicitation of the purchase of goods or services following an initial transaction during a single telephone call. The Telemarketing Sales Rule requires, among other things, that express informed consent be obtained before billing a customer.