An original Khubani
In the world of “As Seen On TV” companies, the undisputed King is Telebrands. In fact, its founder, A.J. Khubani even designed the now-ubiquitous red-and-white logo that adorns almost all products sold via infomercial. Let’s pull the curtain back and reveal the “wizard” with this brief history…
It All Began With an AM/FM Radio…
Ajit J. (aka A.J.) Khubani graduated from Montclair University in 1983, majoring in business administration. His father had migrated from India in 1957 and became wealthy by importing electronics. Ajit was determined to follow in his father’s footsteps and decided he wanted to go into mail order.
The first product he sold was an AM/FM radio made in Taiwan that looked like the popular Sony Walkman, but sold for a fraction of the price (and didn’t play tapes). Taking $7,000 of his life savings he launched the small business, placing ads in the National Enquirer and shipping orders by hand from his house. Khubani broke even with the radio, which encouraged him to keep going and find something else that would be a hit.
AmberVision Lights Up Sales
As he continued to add more products to his mail order catalogue, the business expanded, earning him his first million dollars at 26, just three years later. When President Ronald Regan removed restrictions on the number of TV commercials per hour, Telebrands was launched and the Era of the Infomercial began.
The future’s so bright: A.J. wearing Amber Vision
Telebrands’ first huge hit was Amber Vision sunglasses and many more followed. One product, an oval-shaped foot scraper, sat on Khubani’s desk for a year because he didn’t like the design. Then he came up with the name Ped Egg and became the company’s most successful product with over 45 million sold.
Dawn of an Empire
Telebrands is located in Fairfield, New Jersey and since its inception has helped the state become the infomercial capitol of the world. A.J.’s brother Andy founded Idea Village and his brother Chuck started Ontel Products. A former employee of Telebrands went on to form TriStar Products. Together, these companies make up a large chunk of the $170 billion “As Seen On TV” pie.
In 2000, Telebrands expanded globally, but also overextended itself; the company filed for bankruptcy because an abdominal exercise machine failed to sell as many units as hoped. However, the company emerged three months later newly revitalized. “Whatever doesn’t kill you makes you stronger,” Khubani remarked in an article about his life.
Troubles with the Gov
Over the years, Telebrands has had its share of lawsuits. In 1996, 17 states joined with the FDA to sue over the marketing of WhisperXL, a personal hearing device they promised would give wearers “super hearing”; it was settled out of court for $500,000 and Telebrands discontinued the product.
In 1999, the FTC fined Telebrands $800,000 for not living up to its 1996 agreement. The FTC contended that Telebrands continued to not fill customer orders promptly, notify them about delays, or refund cancelled orders in spite of promising to change their ways.
This was settled out of court, with Telebrands admitting no wrongdoing but promising to hire an independent monitor and make regular reports. In 2003 they were hit with another lawsuit from the FTC for deceptively advertising their Ab Force belt; Khubani fought the charges, finally settling for $7 million in 2009.
Current Legal Woes
In August 2014, the state of New Jersey filed a lawsuit against Telebrands, claiming the company continued to violate the Consumer Fraud Act and failed to live up to a 2001 final consent judgment.
Over the course of several months, undercover investigators from the Department of Consumer Affairs made purchases of products like the Pocket Hose and Instabulb via phone or website.
When these agents attempted to order over the phone, they said they were transferred to an automated system with a lengthy ordering process sometimes lasting more than 30 minutes and including aggressive upsells and no way to cancel.
“We take pride that for more than three decades, tens of millions of consumers have trusted Telebrands for delivering innovative products,” a statement from Kubhani said, promising the suit would be resolved in “short order.” As of March 2015, it still has not.
A Break from the BBB
For many years, Telebrands was both accredited by the Better Business Bureau and enjoyed a solid A-rating. However, in September 2014, the BBB yanked their accreditation and downgraded them to an F due in part to the lawsuit filed the previous month.
The BBB accreditation process is voluntary; businesses promise to abide by set of standards that include the prompt resolution of complaints. As of this writing, 1497 complaints were filed with the BBB within the last 3 years and Telebrands failed to respond to 190. Infractions included: problems with products or services (600), guarantee/warranty issues (30), delivery (183), billing (254), and advertising (340).
The Telebrands Process
Every Telebrands product must be given the seal of approval by Mr. Khubani; once a month the company holds an “Inventors Day” where would-be innovators pitch their wares in an “American Idol” type setting.
From there, the best ones are chosen and given test marketing; the company will film 20 infomercials and try them out for at least a week. If the product generates double the advertising cost, it moves to a wider release. A month or two later, they will end up on the “As Seen On TV” section of many chain stores. In spite of being “As Seen On TV,” the majority of sales are from Telebrands products are purchased in person.
But will it be the next 45-million selling Ped Egg? Or will it be more like the Pocket Hose a hot-selling product that only receives a 1.5 star rating and is the subject of a class action settlement for faulty manufacturing?
Either way, Telebrands certainly soldiers on.
Have you had an experience with Telebrands? Let us know below!