I did a bit of looking around, and from the looks of things, Teddy Tanks are not as bad as they seem.
The tank is 3.8L (1G), which, after looking around on the site, is the "bare minimum" size for a betta tank (not ideal, of course). It has a hole in the back of the animal's head (all creepiness aside) which provides oxygen, and you could think of the fur as thermal insulation, therefore keeping water heated (although yes, I do understand that it is the not the same as a heater, but people keep their fish in heated rooms and that's okay too) - and I doubt it is insulating enough that the fish would "cook" inside.
Obviously, there are much, much better and more humane ways to keep a fish, but given what I have read so far on this website, the bare minimum needs are being met.
However, the biggest problem here, is that children of that age are not responsible enough to care for a living organism, and this is very much being marketed as the perfect children's "toy" and I can see many parents assuming that children can care for them adequately themselves without help, much like "sea monkeys". This also perpetuates the idea that bettas, and fishes in general, are ornaments first, and pets second. This is a big problem, because these kids will grow up with this mindset.
To finish off, I'm not supporting the idea of Teddy Tanks, I think they're tacky, inhumane and inappropriate for the age group, but they're not "cruel" as such, and if kept well, would be no worse than the average unfiltered, unheated 1.9-3.8L tank (not that this is the greatest idea in the world, again). There are fish kept in much worse conditions.
Also, on a side note, it would be more useful to e-mail the company and stockists directly, rather than just signing a petition. Petitions that actually mean something occur late in the activism process (for want of a better word haha).