MyPillow gets a rude awakening with $1 million suit settlement

MyPillow Inc., the Chaska-based pillow manufacturer, agreed to pay about $1 million in civil penalties to settle a deceptive ad case brought by prosecutors in nine California counties.

The company can no longer say that its products are able to cure diseases, under the settlement. It stopped making claims of health benefits in its marketing even before the case began, Joe Springer, the company's general counsel, said Wednesday.

"We took them off our website and out of our marketing materials," Springer said. "We have a lot of customers who think our pillow has helped them in a lot of ways, but now we can't let them share that."

After being supplied with evidence of unsupported health claims by Truthinadvertising.org, California consumer protection officials alleged in a lawsuit filed a month ago that MyPillow "knew or reasonably should have known" that the marketing claims were likely to mislead consumers.

The claims came in customer testimonials and said that the company's pillows could treat conditions such as insomnia, sleep apnea and fibromyalgia.

Although the suit affects only advertising in California, the company has already pulled any mention of health claims in all advertising.

A disclaimer on My­Pillow.com states, "MyPillow is not a medical device and is not intended to diagnose, treat, mitigate or cure any disease."

The company, founded in 2005, saw its sales accelerate sharply in 2011 after it started airing 30-minute infomercials featuring founder and chief executive Michael Lindell. In 2012, the company ran more infomercials on U.S. TV stations than any other, market research reported at the time.

Part of the success of the advertising is Lindell's unpolished appeal; he ad-libs much of the time.

"I want to come across as an average guy, talking to his neighbor," he said in a 2014 profile in the Star Tribune.

The company still spends about $1 million on advertising per week, including on infomercials, Lindell said Wednesday. Today, MyPillow operates two manufacturing plants in Shakopee and 16 retail stores, mostly in the Midwest. It has 1,100 employees in Minnesota.

It has sold 18 million pillows since its start and has annual revenue exceeding $100 million.

Lindell said that My­Pillow did not admit any wrongdoing in the California case.

"We decided to pay out rather than pay millions to prove our innocence," he said.

The amount of $995,000 goes to the California counties that are part of the suit.

Another $100,000 will be paid to homeless and domestic violence shelters in California.

"We are pleased our restitution in this case includes giving back, which is a central part of the mission of MyPillow," a company statement announcing the settlement said.

Meanwhile, MyPillow is defending another class action lawsuit filed against it last month in Oregon. That case alleges that the company's "buy one pillow, get one free" promotion is deceptive because the regular price of the pillow is inflated so that consumers are getting two pillows at or near the regular price of two pillows.

In a third class-action suit, also in California, MyPillow agreed recently to pay $5 per household to purchasers who file a claim.

Past lawsuits have included a $1.1 million tax evasion case settled with the state of New York, a $550,000 breach of contract suit and a lawsuit from early investors.

John Ewoldt • 612-673-7633