Last week, the New York State Attorney General (the “Attorney General”) announced settlements with two separate companies relating to claims involving allegations of deceptive advertising and billing practices. The companies, Tristar Products, Inc. (“Tristar”) and Product Trend (“PT”), directly market their respective products, ranging from women’s undergarments to pillows, to consumers. The Attorney General alleged that both companies provided deceptive and misleading pricing information in their marketing information that resulted in a significant number of consumers being billed fees far in excess of what they believed they had agreed to.
What are the Terms of the New York Attorney General Deceptive Advertising Settlements?
New York Attorney General Settles Deceptive Advertising Claims
According to the Attorney General, both companies engaged in deceptive “buy one, get one free” offers that materially misled consumers as to the cost of the product(s) being purchased. For example, Tristar is alleged to have marketed a brazier for $19.99 and an associated “buy 3, get 3 free” offer. However, consumers were ultimately charged $91.73 for these items because of hidden charges and fees. Similarly, PT is alleged to have marketed a pillow for $19.99 with a “buy 1, get 1 free” offer, but subsequently charged consumers $101.83 for the products. The Attorney General alleged that both companies’ respective advertisements did not adequately disclose that consumers would be charged two separate processing and handling fees (or the amount of those fees), which significantly increased the cost of the offered products.
As a result of the settlements, both companies must now clearly and conspicuously disclose all material terms of any advertised offers, including the amount of any processing and handling fees for additional “buy 1, get 1 free” offer items. The companies must also provide consumers with an opportunity to confirm all order details before such orders are placed. Among other settlement terms, Tristar and PT must pay restitution in the amount of $700,000.00 and $175,000.00, respectively.
We recently blogged about the Attorney General settling a deceptive advertising claim against a test preparation company. This increase in activity indicates that the Attorney General is aggressively policing the advertising practices of companies that sell to consumers in the State. It is important, therefore, to consult with competent counsel before rolling out any new marketing campaign in New York.