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State accuses Telebrands of fraud act violations; 340 complaints investigated over 2 years

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Telebrands CEO and President A.J. Khubani, far right, participates in the TeleBrands' Virtual Inventor's Day with Women Inventorz Network earlier this year in Fairfield.
Telebrands CEO and President A.J. Khubani, far right, participates in the TeleBrands' Virtual Inventor's Day with Women Inventorz Network earlier this year in Fairfield. - (FILE PHOTO)

Telebrands Corp., known for its “As Seen on TV” products, has been accused by the state of violating the Consumer Fraud Act; it may face a civil penalty of up to $20,000 for each violation of the act, plus consumer restitution.

The Office of the Attorney General and the New Jersey Division of Consumer Affairs announced Wednesday there was a formal complaint filed against the Fairfield company, which alleged it was upselling products through its automated phone service and website.

Telebrands’ other suspected violations include failing to provide a means of opting out of the merchandise ordering process, shipping and billing for products not explicitly ordered by consumers and using misleading advertisements.

RELATED: Inventors who want their products to be 'Seen on TV' must first pass eyeball test of Telebrands' Khubani

The company resolved prior litigation with the state in 2001 that, among other things, required it to comply with the Consumer Fraud Act. Wednesday’s complaint states Telebrands violated the terms of that judgment as well.

Upwards of 340 consumer complaints regarding Telebrands’ business practices were received by the Division of Consumer Affairs over the past two years, the announcement claimed.

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In the past few months, Division of Consumer Affairs investigators have been making undercover purchases of Telebrands’ advertised products through its website and the numbers featured in the company’s television commercials.

The agency reports to have found an automated phone service system that “subjected consumers to a lengthy ordering process,” and also “failed to provide consumers with an opportunity to confirm the merchandise order prior to authorizing charges.”

Additionally, the state’s complaint alleges the company even charged and shipped merchandise that the consumers declined to purchase while placing an order, while failing to inform the consumer of cancellation or return policies.

During the undercover purchase of one of Telebrands’ products, the automated phone system requested the investor provide an email address. This led to an enrollment in a paid monthly savings program that was difficult to cancel, according to the complaint.

On the website, Telebrands failed to provide consumers the opportunity to edit their virtual “shopping cart,” the compliant also asserts, resulting in consumers ordering products they never wanted.

“What’s (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 website,” acting Consumer Affairs Director Steve Lee said.

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Brett Johnson

Brett Johnson

Brett Johnson covers a wide array of sectors as a general assignment reporter. Before joining NJBIZ in 2014, he lived on the West Coast and wrote for a newspaper in Davis, Calif. You can contact him at brettj@njbiz.com or @ReporterBrett on Twitter.

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