It says you'll be billed month per month on the right hand side under the VIP membership program, but I think it's pretty clear that the page is engineered to be misleading. It looks like a standard upsell, not a mandatory part of the purchase.
They're relying on people clicking the accept terms and conditions check box without realizing that it's signing them up for the membership, i.e. it's the terms and conditions of the program, not the site in general.
Terms and conditions boxes are common in the checkout process and nobody gives them a second thought. I'm not sure I would have caught this one if I went in naively.
I don't know about the US, but here in Germany you can't put that kind of stuff into your terms and conditions.
Well, you could, but those terms would be ineffective. Of course, this doesn't help if they succeed to intimidate the victim. But if the victim doesn't pay, there's nothing the scammer can do, because this case would never succeed in court.
Having said that, it might help if the victim complains to the police. Depending on how serious customer protection is taken in the US, this business might be more than merely "unethical".
Not only ineffective, but its planned to make this deceipt downright illegal. You have to state all of the costs in clearly readable text on the signup page itself and change the button to indicate that you are signing up with recurring costs.
Maybe I'm being too permissive, but that screen doesn't look fishy at all. I went through the purchasing/sign-up process, and it goes like this:
1. create a profile (answer questions on style)
2. fill in details, click a *JOIN NOW* button
3. get a "*first month* for 50% off" offer
4. get to this payment screen
At no point it implies you are buying a single product, there are no "buy now" buttons or calls to action.
To me it's pretty clear that it's a recurring service, like many others that exist for chocolate, wine, beer, socks, razors, etc. The right hand side on the checkout is clear enough, and the skip the month part is there highlighted, not in small letters.
EDIT: apparently this is just the flow after choosing something on the home page. If you choose one of the "special" products or go to the Featured section, it does go through a standard add to cart + checkout flow (http://minus.com/lA7snPkHUHOZR). That is actually terribly misleading.
Actually it says you'll be billed for a "Member Credit", which "can be redeemed for any JustFab style on the site".
I'm not sure what that means exactly, but if you can actually redeem one of those credits for $39.95 worth of product, then 1. it's still very misleading because you spent a lot more money in their store, on their products than you intended to, but 2. at least your money didn't just evaporate, except 3. is there anything preventing them from at some point deciding "From now on, we will only sell novelty dish-washing sponges, at the great rate of one credit per sponge!", making all out-standing credits worthless in a single TOS change?
The grandparent's link says "Each credit can be redeemed for any JustFab style on the site."
Seems to me that they're saying if you're a member but didn't make your decision for your free (sunk cost) product by the 6th, they charge you and turn it into store credit. It's not like they're charging you and saying "too bad, you don't get anything."
It may be different, yes, and I can relate to the OP's original complaint from his girlfriend. Still, given the language used on the site and the (albeit weird) use of a "credit" that can be used in the future for each month you don't buy something, it doesn't seem unfair at all to me.
I will say that the negative attention this confusion could bring them is more harmful to them than if they revamped the purchase process to just make it crystal clear what you're buying.
From my experience at Poll Everywhere, the "sidebar" on the checkout process does not get read by anyone, anytime. For some reason, the sidebar becomes a blindspot and is ignored (at least in our testing) during a checkout process and so is thus not a great spot to put reminders about how you're joining a membership and will be charged monthly if that is the only place is is put.
I agree it's unethical. This is a commercial site, it tries to offer goods in exchange for money, anything that costs money should be emphasized and explained. How would they feel if someone managed to take some of their merchandise by stealth?
I don't think this is some grey area: if you tricked me into paying a sum I never chose to pay, you're stealing money off my pocket.
That reminds me of certain ads I sometimes see on the french TV for ringtones or silly phone games: if you read the small print you realize they actually offer a membership, not a product, and you actually pay something like 3 euros a week instead of a one-time fee. They call that "clubs" or something.
Those ads usually seem to target teenagers (they're mostly on music channels or channels aimed at kids) who probably aren't in charge of the bill and if they're not careful they might end up with a bad surprise. This is beyond shoddy.
Thanks for the screenshot. This is outrageous IMO. Few people will notice that the TOS checkbox actually reads "JustFAB VIP membership program". Most people will take it as a normal TOAS checkbox that you have to agree every time you order from any website. So, yes, the page is designed to be misleading a.ka scam some subscription fees.
I don't really think so. When I visited the website, the first thing (it took up 50% of the page) that I saw was a call out asking you to rate items, and reveal your fashionable interests so you'd get personalized advice. Then it asked me to join their VIP program.
Honestly, I'd have to click around a little bit to even figure out how to just search something without first joining them and going through the VIP program upsales processs.
Note that regardless of what the screen shot looks like today, it's very possible the site already improved its disclosure in response to complaints/threats. It would be interesting to go back in time and compare the disclosure at launch to what's on the site today.
At least the bullet points on the right clearly describe how the site works. I'm not saying it's not misleading, but I think OP's complaint that customers have to “read their entire 2,500 words Terms of Service” to see what the deal is, is basically wrong.
(Also you don't get “nothing” for $39.95; you get store credit. That sucks if you didn't want any, of course, but given the fact that people actively sign up to be able to purchase from that store, I can't imagine it's entirely worthless.)
So the site doesn't force you to join the VIP program? The way it is structured would definitely see a lot of people check it and click through without checking. In my experience stuff we make a lot more obvious than this is plain ignored during checkout.
The reason to buy says, "over half a million subscribers save hundreds a year". This statement could burn them in court if proven to not be a factual statement.
I would surmise that it could be shown that the half a million subscribers paying $480 a year each, (240 million total) may not save hundreds a year. The least they would have to show for a forgiving jury would be that subscribers saved a total 100 million in personalized boutique purchases and general shipping. A demanding jury would require 340 million in savings. I would wager that argued by a savvy attorney the statement could be read as a misrepresentation in advertising. It would also be based on how it read at the time of original subscription, so there wouldn't be much value in changing the statement now and only provide more validity toward it being a misleading statement. The defense would argue that people read the the info on the right, understood the terms and checked the box in agreement. The prosecution would argue that the claims in bold of so many saving so much resulted in more making the purchase, which was a false misleading statement.
Sales people make these types of claims all the time over the phone or in person to get a sale, putting it in writing is a huge mistake, and online retailers shouldn't be so brash.
I wonder how this company (and these kind of companies) can keep their merchant account open for so long. There has to be some trick here.
For example, maybe they keep enough to funds for last 6 months of chargebacks and have some special kick-back to bank? Or maybe the game plan is to always open a new merchant account after the first one is closed? Or maybe the bar is so low and they never need to worry to lose their merchant account?
You sign up for what is called a "High Risk" merchant account.
Porn sites, bail bonds, check cashing locations, dating sites, weight loss centers, and dozens of other types of businesses use this category of services which has a very high tolerance of chargebacks.
The sad part is if you get enough chargebacks you can actually bake in a higher transaction cost and not have to pay per-chargeback fees like other normal merchants do.
Regarding your comment: "It says you'll be billed month per month on the right hand side under the VIP membership program, but I think it's pretty clear that the page is engineered to be misleading."
I'm sorry: you're talking about the section that explains "How the JustFab VIP Program Works"? Whose 4 bullet points say:
1. Get a boutique the first of the month
2. Browse and Buy
3. Don't like anything, skip
4. If you don't buy or skip by the 5th you'll be charged anyway?
And a default unchecked box that you read and agree?
I think the concept of "engineered to be misleading" might just put the points in say, a small font, or in the terms and conditions behind a link. If someone describes it clearly in bold font in a section explaining how the site works, well, that's a pretty strange way of misleading people.
The misleading part is that (in at least one common usage path), the site sets itself up to look like every other online shopping site. The kind that people expect to use by putting stuff in their "shopping cart" and proceed to "checkout" and pay once.
Think of the people in your life not quite as tech-savvy as yourself, like maybe your next-door neighbour or your mother. Would you expect them not to be misled by this? Sure, I'd hope my mother would be critical enough to notice, but I can easily see it happen otherwise.
Another indication is, I assume that a lot of people who do notice will instead decide to bail out entirely and not buy anything, rather than (like I would do, if I really wanted the item) pay, log in, and cancel the account immediately. Because that's not really an obvious thing to do, given the set expectation of being a regular online shopping store.