Similar to a "red herring" a "warm towel" is a ruse to distract someones attention.
Etymology: From an environmental movement called Tidowave's events. It is recommended to members that a warm towel be brought - this implies, without stating, that Direct Action will be in effect at the event.
Margaret: "Did you find Randy or find out what happened to Teddy?"
Jamie: "Nah, it was a warm towel."