The Better Business Bureau of Minnesota and North Dakota revoked MyPillow Inc.’s accreditation, citing a battle to persuade the Chaska-based manufacturer to stop a lengthy “buy-one-get-one-free” promotion.
The bureau also lowered its rating on MyPillow from an A+ to an F. The consumer rights outfit said it pressed MyPillow since last August to end the marketing ploy, referred to by the acronym BOGO.
“Continuous BOGO offers, which can then be construed as an item’s regular, everyday price, violate not only BBB’s Code of Advertising, which all BBB Accredited Businesses agree to abide by, but also other state and national organizations’ rules,” Dana Badgerow, president and CEO of BBB in Minnesota and North Dakota, said in a statement.
The Minnesota BBB, which handles the MyPillow ratings for all bureaus because the company is based in Chaska, was getting calls from many of the 107 other BBBs in the U.S. and Canada.
MyPillow Chief Executive Mike Lindell said Tuesday he was “disappointed” in the bureau’s decisions. He said the company dropped the buy-one-get-one offer in new advertising but couldn’t halt it before the end of 2016.
“The ads that will start running in January do not include the BOGO,” he said. “We prepaid for those TV ads that aired at the end of the year. If we’d pulled them, we would have had some very disappointed customers.”
Barb Grieman, senior vice president of the BBB in Minnesota, said that changing a rating to an F rarely needs to be done because the rules are explained and then the company changes its ads. “We can’t understand why he’s not making the changes,” she said. “We’re not saying he can’t offer a BOGO, just not continuously all year long.”
BOGO promotions need to be offered for 30 or fewer days or the price becomes continuous and therefore the normal price, not a sale price, according to the BBB. MyPillow has been giving the BOGO to nearly all customers regardless of whether they mention it or not.
“It’s unfair to businesses in the same industry. We want advertising to be clear,” Grieman said.
In October, a federal lawsuit was filed in Oregon about the BOGO ads being deceptive, but Lindell said he hasn’t been served papers yet.
Nationwide, more than 230 complaints have been logged about MyPillow in the past three years, mostly about the buy-one-get-one offer. Other complaints involved the warranty. Consumers need to pay a fee to return the pillows, but Grieman said that issue has been resolved.
The BBB has also questioned the company about packaging that misrepresents the pillows inside. Photos show a premium gusseted pillow but the box holds a standard pillow. The company has made an effort to correct this, but “As Seen on TV” packaging can still be found in such third party retailers as Target, Wal-Mart, CVS, Walgreens and Bed Bath & Beyond.
Some consumers complaining on the BBB website indicate that they paid $100 for two premium pillows but the label is the same as on the standard pillows from Bed Bath & Beyond.
In November, MyPillow agreed to pay about $1 million in civil penalties to settle a deceptive ad case brought to prosecutors in nine California counties. The company is no longer allowed to say that its products can cure diseases or such conditions as insomnia, sleep apnea and fibromyalgia. Lindell said that he decided to pay the settlement rather than spend millions more to prove their innocence. He is currently funding a study that he said will change the way people think about the customers’ testimonials.
MyPillow operates two manufacturing plants in Shakopee and 16 retail stores, mostly in the Midwest. It has 1,500 employees nationwide, with 1,100 in Minnesota, and annual revenue of more than $100 million.