The Back Story Behind the State of NJ & Telebrands
In November of last year, we outlined how Telebrands—the oldest and largest company within the “As Seen on TV” industry—was being investigated by the NJ Attorney General’s office.
According to the state, Telebrands violated their original 2001 Final Consent Judgment by “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.”
In other words, customers (literally) couldn’t say no to upsold items when ordering Telebrands’s products over the phone. As a result, they received products they didn’t want, and were mislead about how some of these products worked.
And because Telebrands had consistently disregarded their agreement for such a long period of time, the state was looking to double the per-violation fine from the normal $10K up to $20K.
Telebrands Pays Up
Not much was published about the investigation until recently, when it was revealed that Telebrands paid a $550K cash fine to the state of NJ. Although the company didn’t admit to any liability in the case, they were required to “stop aggressively upselling products, and must also have actual human staff members available for customers wishing to speak to a live operator.”
The Portland Press Herald also noted that Telebrands is now required “to retain at its own expense a consumer affairs liaison for up to two years. The liaison will be subject to state approval and will monitor the firm’s compliance with the settlement terms and applicable laws. The liaison also will help resolve consumer complaints and provide quarterly reports to the state.”
Let’s unpack all of this information and see what it all means for you, the consumer.
What the Telebrands Settlement Means for You
After the settlement was finalized, Telebrands CEO AJ Khubani was quoted as saying, "When these issues were brought to our attention, we immediately welcomed the recommendations and partnership with the Division of Consumer Affairs to resolve these matters. We are a company predicated on consumer satisfaction and if we can improve the experience of our customers, we want to do that expeditiously."
To accomplish this (in addition to making live customer service personnel available and removing aggressive upselling tactics), Telebrands claims they’ll “improve the shopping experience.” Specifically, this means they “won't be allowed to repeat offers for additional merchandise once consumers have declined them,” they must clearly disclose all costs before finalizing orders, and customer service reps will be required to undergo new training.
For now at least (as of 9/23/15), the Telebrands’s approach to online selling appears to still be the same, with 30-day refund policies, generally steep, non-refundable S&H charges, and “revolutionary” claims. It does appear that order totals are clearer when checking out, though.
We’ll be sure to keep a close eye on Telebrands’s sales practices and follow up here if we notice any big improvements.
For now, what else does the future hold between Telebrands and their customers?
Putting the Telebrands Settlement into Perspective
If we’re to take Mr. Khubani’s statement above at face value, it took thousands of hours of manpower by the NJ Attorney General’s office to help “bring the issue to the company’s attention.”
But ask yourself this: Why didn’t the company do something about the problem in the first place? There are perhaps tens of thousands of negative customer reviews out there for Telebrands products (there were well over a thousand on the Better Business Bureau alone at the time of our research), most of which referenced many of the same complaints noted in the state of NJ’s investigation.
Are we to believe that the higher-ups at Telebrands weren’t aware of these common complaints? Do we really think that the company didn’t purposely set up their ordering system to make the process confusing (and to last more than half an hour)? Should we really believe that Telebrands unknowingly violated their original agreement with the state for well over a decade?
As a consumer, you’ll have to decide whether or not Mr. Khubani’s statement matches with the available evidence.
But keep this in mind: Over the years, Telebrands has been involved in at least 6 different tangles with consumer protection agencies, and has paid more than $1.5 million to settle other lawsuits and complaints. And while this recent $550K action is among the most expensive, it’s just a drop in the bucket, considering the company sells more than $1 billion in retail products per year.
Ultimately, is there any real incentive for the company to change? We’ll have to wait and see to find out.
What’s Your Experience with Telebrands?
Have you recently purchased a Telebrands product? Do you have any additional insight into the company’s recent settlement with the state of NJ?
Whatever it is, we want to read your feedback, so leave a comment below to join the conversation!