You Are Kidding!!!

Across the country, customers who’ve ordered the popular Snuggie blanket are getting something else in the mail - an $8.50 check, with a catch.

“I thought it was a rebate on shipping,” said Marc Catalina, who received the check seven months after ordering a Snuggie.

The check - which comes in an envelope stamped with the Snuggie logo - is real but it’s not a rebate.

It’s from a group called “Great Fun” - a company that promises 2 percent back off credit card purchases. They piggy-back onto Snuggy and a number of products with a controversial advertising method.

On both the front and back of the check, in small print, is a notice that says cashing or depositing the check automatically signs you up for a $150 a year membership in their service.

“By cashing or depositing this check you are purchasing a membership in Great Fun,” it says in small print on the front. “When you cash or deposit the enclosed check, we will automatically charge the $149.99 annual fee to your credit card,” it explains on the back.

Deceptive or clever marketing?

Consumer experts say it’s not illegal but it can be deceptive.

“If it comes to me, I’m probably going to look at it and say $8.25? That’s worth my while to cash it,” said Travis Ford with the Missouri Division of Finance.

While some marketers defend the practice of sending so-called “activation checks” as a legitimate form of advertising - with everything spelled out in writing -Ford says it can catch unsuspecting consumers off-guard.

“It’s certainly not as clear as it could be,” said Ford. “Because normally there’s fine print on the back of a check where people don’t spend a lot of time reading anyway.”

Ford says this type of advertising has been challenged by consumers across the country, including here in Missouri. Last year, then-Attorney General Jay Nixon got a 26-state, $400,000 settlement in a lawsuit against a company that sent out similar checks.

“Any company that does this may run into trouble,” said Ford. “Either with unhappy customers or even law enforcement agencies.”

Not a rebate or refund

A representative from Great Fun told us, emphatically, what they’re doing is not deceptive.

“We view our terms as clear, inconspicuous and as up front as possible,” Mike Bush, a spokesman for Great Fun said by phone. “At no point do we claim there is a rebate or refund attached to this. It’s simply an opportunity to try our products.”

The $8.25 amount isn’t chosen randomly. It’s calculated, based on research, to get the greatest number of people to cash the check, according to Bush.

Still, he acknowledges people could “mistakenly opt into this program,” despite the fine print. He says a full refund will be offered to anyone who unknowingly signed up.

Less than 1500 people, a small amount of their customers, have recently cancelled their accounts, said Bush.

KRCG News tried to contact representatives from Snuggie but were unable to reach anyone.

“Justice needs to be served, but not at the expense of innocent people - that wouldn’t be justice, would it?”

Because he wanted to pass a family business on to his son and two daughters, Charles Terrizzi started his own small company out of the converted garage behind his house. With five employees, Charles’ start-up, Chase Air, installs air conditioners in homes in Jacksonville, Florida.

Last year, Charles was working in a customer’s attic when he received a call from his service crew. He learned that a man crossed a yellow line and veered into oncoming traffic, hitting one of Chase Air’s two vans head on. The police determined that the accident was the other driver’s fault. But that didn’t stop the ticketed driver from hiring a lawyer to file a claim with Charles’ insurance, threatening to sue if they did not pay for the damages that, according to the police report, he himself caused. 

Like they do with many other claims, the insurance company decided that, not withstanding the facts of the accident, it would be more costly to fight and win in court than simply to pay a settlement, so they gave the driver $10,000. Charles said, “The sad truth is that it’s cheaper for [the insurer] to settle as if they did something wrong when they didn’t do something wrong… Thus it’s perpetuated that opportunistic lawyers can continue to do these things. They’re made stronger when who’s made weaker? The American people – the hardworking people.” 

In this case, Charles was right. After receiving the money from Charles’ insurance company, the driver and his lawyers next sued the young man who was driving the Chase Air truck. That case is still ongoing.

Speaking about the cost of lawsuits to American businesses, whether in the form of higher insurance costs, out of court settlements, or expensive legal fees, Charles said, “All these things factor into our ultimate price to our consumers, and everybody has to pay for it.” 

According to Charles, not only do the costs of liability insurance and other legal fees drive up prices, but one lawsuit could easily put his small start-up company out of business. “Justice needs to be served, but not at the expense of innocent people – that wouldn’t be justice, would it?”

For more jaw dropping cases of lawsuit abuse, visit Faces of Lawsuit Abuse.