

Why a scam company was able to raises $76 Million Series B? - wenxun
http://www.businessinsider.com/justfab-raises-76-million-to-create-the-hm-fashion-brand-of-the-web-2012-7

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wenxun
I just stumbled upon this piece on Business Insider "JustFab Raises $76
Million To Create The H&M Fashion Brand Of The Web".
[http://www.businessinsider.com/justfab-raises-76-million-
to-...](http://www.businessinsider.com/justfab-raises-76-million-to-create-
the-hm-fashion-brand-of-the-web-2012-7)

It kept me wonder why a company with very questionable (I will try to avoid
using the word "fraudulent") business model was able to raise big money.
Didn't the VCs have to do the due diligence?

I didn't have any direct experience with JustFab. The victim was my
girlfriend. Back in January or so, one of her friends emailed her a link to
JustFab, then she bought a pair of shoes from www.justfab.com and never visit
the website again. Only 8 months later, in early September she was appalled to
find out that her credit card has been charged a $39.95 fee for the last eight
months. Yes, $39.95 for 8 months, without geting anything from JustFab.

I then did a bit research on the internet. It turned out my girlfriend wasn't
the only victim. Apparently JustFab works like this: once you buy something
from their website, you become their "VIP member". Then you will have to log
into their website between the 1st-5th of each month and click “Skip This
Month”. If no action is taken (either skip this month, or cancel your
account), they just charge you a $39.95 fee every month.

According to the Business insider article, JustFab "will generate about $100
million this year" in sales, I wonder how much of this $100 million are from
people like my girlfriend who simply didn't read their entire 2,500 words
Terms of Service and were unaware that they were charged $39.95 a month for
nothing.

~~~
justscam
I'm sorry for your gf's loss, but from what you have described I don't see
anything justfab did wrong here. Next time read the terms first before giving
credit card info!

~~~
tisme
Do you read the terms every time you swipe your card to buy a pair of shoes or
a bag in a regular store? Why should it be any different online? If the
intention of a consumer is clearly to buy a single item _once_ for a fixed fee
then a forced membership buried in the terms of service is not what they
expect, and not something they should suspect.

It's a ridiculous stance to blame a consumer for trickery like this.

