Sapna Maheshwari, The New York Times
Published: 2020-02-12 14:54:18 BdST
But Fabletics and the startup TechStyle Fashion Group, faced complaints about deceptive billing tactics, and now Rihanna’s line, Savage x Fenty, is now facing some of the same criticism.
The line has been praised for using models of different body types and ethnicities in its marketing. But on Tuesday, Truth in Advertising, a nonprofit organisation, said that Savage x Fenty “ensnares consumers into unwanted monthly charges” through a membership plan that was difficult to opt out of. It said it had alerted the Federal Trade Commission to the line’s business practices, which it believes violate the agency’s rules and the Restore Online Shoppers’ Confidence Act.
When consumers buy items like bras and underwear from the Savage x Fenty website, the brand allegedly enrolls consumers in $50 monthly subscriptions “without disclosing all the material terms and conditions of the offer,” Truth in Advertising said. The prices that appear when an item is added to a shopper’s online cart — say, $19.50 for a pair of leggings — require a membership. For nonmembers, the price of the leggings would more than double. Truth in Advertising added that the brand also used “dissuasion and diversion tactics” when consumers tried to cancel memberships.
The group also said that ads for the line from social media influencers could be deceptive.
Savage x Fenty denied the claims. “These accusations are false and based on misconceptions of our business,” Emma Tully, a representative for the line, said in an email.
“At Savage x Fenty, we believe strongly in transparency, which is why we provide multiple disclosures of membership terms throughout the shopping experience, within advertisements, and through our ambassador engagement policies,” she said.
The complaint from Truth in Advertising involves the pervasiveness of so-called negative-option billing online, which refers to the practice of companies charging consumers for a service unless it is specifically declined.
“A lot of consumers really love the fact that this brand is championing female empowerment and inclusiveness, and so they are very willing to purchase products from this website,” Bonnie Patten, the executive director of Truth in Advertising, said in an interview. “What they don’t understand is that the prices they’re seeing on social media are prices for joining a membership, and because of the way the checkout process works, they are unwittingly being put into a subscription model.”
When customers add items from the site to a shopping cart, a “Savage x Monthly Membership” is automatically added. To check out, customers have to proactively remove it, which may cause the price of items to rise sharply.
TechStyle has raised more than $500 million in funding and is valued at about $1 billion, according to Pitchbook, a data provider. The startup, formerly known as JustFab, and its founders have specialised in these types of subscriptions for years.
In 2014, Adam Goldenberg, the company’s co-founder, was named in a complaint against Sensa, a company he led that sold a bogus miracle weight-loss powder. The FTC fined Sensa nearly $50 million, one of the biggest it had ever given for deceptive advertising.
TechStyle paid $1.88 million the same year to settle a consumer protection lawsuit that claimed that its brands, including Fabletics, failed to “clearly and conspicuously” explain that its discounts required automatic monthly subscription fees.
Still, TechStyle has been viewed as a Silicon Valley success and is expected to eventually conduct an initial public offering.
Consumers may be aware of the Savage x Fenty business model, but Patten said that Truth in Advertising had tracked hundreds of complaints around the company’s billing and cancellation practices.
© 2019 New York Times News Service