Newark - The Office of the Attorney General and the New Jersey Division of Consumer Affairs have filed a complaint against Telebrands Corp., the Fairfield-based company known for its "As Seen on TV" products. The state alleges that Telebrands violated the Consumer Fraud Act through its practice of aggressively upselling products through its automated phone system and websites, failing to provide means for consumers to opt out of the ordering process, shipping and billing for products not ordered by consumers, and using misleading advertisements, among other violations.
The state's five-count complaint, filed in Essex County Superior Court by the Division of Law, also alleges that Telebrands violated the terms of a 2001 Final Consent Judgment and Order that resolved prior litigation with the state and, among other things, required the company to comply with the Consumer Fraud Act. From 2012 through July 2014, the Division has received, either directly or indirectly, 340 consumer complaints regarding Telebrands' business practices.
"As demonstrated by its alleged actions, Telebrands cannot be trusted to do right by its customers or to even honor its own 2001 pledge to follow our consumer protection laws," Acting Attorney General John J. Hoffman said. "We are bringing this action to end the abusive business practices that Telebrands allegedly is inflicting upon consumers."
The state's complaint alleges that Telebrands violated the Consumer Fraud Act by engaging in unconscionable commercial practices; making false promises and/or misrepresentations; and knowingly omitting material facts, in violation of the Consumer Fraud Act; and violated the Advertising Regulations by obscuring material facts (i.e., processing fees) and using misleading terms (i.e., "SPECIAL OFFER") in its product infomercials and other advertisements. The alleged violations are based upon consumer complaints as well as an undercover investigation conducted by the Division of Consumer Affairs.
Over several months, Division of Consumer Affairs investigators made undercover purchases of products advertised and offered for sale by Telebrands, including "Instabulbs," the "Olde Brooklyn Lantern" and the "Pocket Hose." The purchases were made through various Telebrands websites and as well as the toll-free numbers featured in the company's television commercials and infomercials.
The state's complaint alleges that consumers calling the company's toll-free numbers were generally connected to the Telebrands Interactive Voice Response (IVR) System, an automated phone ordering system, rather than a live customer service representative. The state's complaint further alleges that through its Telebrands IVR System, the company subjected consumers to a lengthy ordering process, sometimes lasting over half an hour; offered additional products, yet failed to provide a mechanism to decline the offer; aggressively solicited orders for additional products (e.g., during undercover Instabulb purchase, soliciting for at least seven additional products); failed to provide consumers with an opportunity to confirm the merchandise order prior to authorizing charges; charged and shipped additional merchandise that the consumers declined to purchase while placing an order. In addition, the complaint alleges the company failed to inform consumers of Telebrands' complete purchase, cancellation and return policies; failed to provide consumers with the total cost of their orders; and failed to provide consumers with an opportunity to speak with a live customer service representative.
The state's complaint also alleges that through its product-specific and other websites, Telebrands failed to provide consumers with the opportunity to edit their virtual "shopping cart," thus resulting in consumers' ordering products they neither intended nor wanted to order; failed to inform consumers when they are completing their merchandise order and authorizing charges; made it difficult for consumers to decline solicitations by obscuring the "No Thanks" link through the use of small text and a light color; and charged consumers more than the total reflected in the summary of charges.
In addition, the state's complaint alleges that upon receipt of Telebrands' products, consumers received non-conforming merchandise; received merchandise that they did not order; were not provided with instructions as to the return of merchandise; were required to return to Telebrands the non-conforming merchandise or merchandise not ordered at the consumers' expense; and had difficulty in contacting and communicating with customer service representatives (e.g. placed on hold for lengthy periods of time and/or disconnected).
"This action against Telebrands alleges that consumers were repeatedly pressured through gimmickry, misrepresentations, and high-pressure sales tactics to buy products they didn't want," Acting Consumer Affairs Director Steve Lee said. "What's just as unconscionable is that when consumers attempted to return unwanted products and obtain refunds, they allegedly couldn't reach actual customer service representatives and were subjected to return policies that differed from what was represented in ads and on the company's web site."
For example, a Division of Consumer Affairs investigator who attempted to return an Olde Brooklyn Lantern and obtain a refund was required to make four telephone calls to the Telebrands "800" number identified in the delivery invoice, after being disconnected twice and placed on hold once. After finally reaching a Telebrands representative, the Division investigator was instructed to call another toll-free number, which connected him to the Telebrands IVR System. After being placed on hold, the Division Investigator spoke with a Telebrands customer service representative, who stated that the return could not be processed without a credit card number. The Division investigator then asked to speak with a supervisor and was then placed on hold for three minutes. The supervisor also stated that a credit card number was needed to process the refund even though the refund policy as posted on the company's web site stated that a credit card was not needed.
During the undercover purchase for the Pocket Hose, the Telebrands IVR System requested that the Division of Consumer Affairs investigator provide an email address. Two days later, the Division investigator received an email under the heading of "Welcome to Everyday Family Savings" which stated that he would be enrolled in the "Everyday Family Savings" program at a cost of $19.95, which would automatically renew each month unless he called that day to cancel. During the order of the Pocket Hose, Telebrands did not disclose to the Division investigator that he was being enrolled in the "Everyday Family Savings" program.
Through this action, the state is seeking restitution for the affected consumers, plus civil penalties and reimbursement of its investigative costs and attorneys' fees. The Consumer Fraud Act provides for a civil penalty of up to $10,000 per violation. Based upon Telebrands' violation of the 2001 consent judgment, the state is seeking enhanced civil penalties, in an amount of up to $20,000 for each violation.
Investigator Elizabeth Perry in the Division of Consumer Affairs Office of Consumer Protection conducted the investigation, assisted by Investigator Michael Meola.
Deputy Attorney General Natalie A. Serock in the Consumer Fraud Prosecution Section of the Division of Law is representing the state in this action.
Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file a complaint online with the State Division of Consumer Affairs or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.