Hacker Newsnew | comments | show | ask | jobs | submit login
Why can a scam company raise $40 Million Series C + $76 Million Series B?
1065 points by wenxun 605 days ago | 461 comments
Just learned from Venturebeat & Techcrunch that JustFab closed $40 million in a Series C round of funding [1][2].

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 2012, 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. Then 8 months later, in September 2013 she finished her Master study in the US and returned to her home country. 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 getting 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" without your knowledge. 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 article published on BusinessInsider, JustFab "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.

[1] http://venturebeat.com/2013/09/26/justfab-sews-up-40m-to-become-global-fast-fashion-empire/

[2] http://techcrunch.com/2013/09/26/justfab-has-raised-another-40m-led-by-hong-kongs-shining-capital-to-take-its-fashion-subscription-commerce-model-to-asia/

ps. This is a re-post of my last year's post [3], hoping it will get upvoted to the frontpage of HN so that more people get to know the shady business JustFab does. Apparently VCs don't do due diligence any more, as long as scam companies like JustFab can bring them money.

[3] https://news.ycombinator.com/item?id=4592778




I'm the Series A investor in this company.

We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusually high for a subscription service.

I obviously cannot speak to your girlfriend's experience. With nearly a million subscribers, there are certainly people with bad experiences -- same is true with any service. Netflix is great but I am sure there are a number of people who have had a bad experience.

I would encourage the HackerNews community to consider the opposite: if we assume the investors in this business do perform due diligence, is there another possible explanation? Is it possible that this case is not representative of the average case?

But hey, we don't have to be he-said-she-said here, anyone can just go to the site and verify if this claim is true. In essence, the claim is: "The site tricked me. I went to buy a single pair of shoes, and in doing so, they actually started taxing my credit card every month, and no one warned me."

Folks are right to be skeptical -- a lot of businesses have done this, tried to hide the fact there would be future charges. Does JustFab?

I just went to the site -- you can do this -- picked a random pair of boots and put them in my shopping cart. I then clicked checkout, and here is what that page looked like:

http://imagesup.net/?di=15138026329215

"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" -- Seriously, please look at the link above to the checkout flow and tell me that's how you see it, that you have to read the 2,500 word TOS to figure out that this is the case.

Seems pretty clear to me. You can get the boots for $39 if you join the VIP program. "With this purchase, you will be activating your VIP membership"

Under "How VIP Membership Works", it explains: " If you do not take action between the 1st and the 5th of the month, you will be charged $39.95 for a member credit on the 6th. Each credit can be redeemed for 1 JustFab item, so use it to shop later!"

It's in plain English, and in the same font size as everything else on the page. Over 800,000 people can manage their subscription account every month without racking up credits. I'm sorry it didn't work for your girlfriend, and I recognize she is not the only one who has not grokked the subscription element and been surprised -- but it's a tiny minority, and the information is quite clear on the site.

Finally, one may ask: why subscription at all? Well, $39 for a high quality pair of boots is a really, really good deal. Most e-commerce merchants have to reacquire their customers for every transaction. By asking members to commit to come back to the site once a month, the company doesn't have to constantly pay google or other traffic sources to acquire members, and to have prices like this you have to keep costs low. That's the deal. There are plenty of higher priced places to buy shoes if you don't want to subscribe.

Double finally: credits never expire. If you have 8 credits in your account, you can go get 8 pairs of shoes.

Justfab is an awesome company and is creating and H&M or Zara experience online: fast fashion at great prices. I'm not sure HN is the target demographic, but it's a great service and customers love it, and VCs have poured money into because of that.

-----


The other commenters are being too nice in their replies.

You're full of shit. JustFab is a shoe of the month club masquerading as a normal online shoe store. The VIP Membership Program is the essence of JustFab's business model and yet it's missing entirely from the home page of their site. It looks like any other shoe store. And yet you think it's clear that the user is being signed up for a shoe of the month membership when they originally clicked through to buy a single pair of shoes.

The entire checkout process is engineered to get people to sign up for the "VIP Membership Program" without realizing what it is. If they wanted to be up front about it, they'd explain it on the home page. They'd include it in the list of items that you're purchasing. They'd include the relevant terms (not just a link to them) on the page where you enter your credit card information. They'd put the terms higher on the page so that you're more likely to read them. They'd put the "Checkout as a regular member" link next to the "normal" checkout button and they'd make it just as big. And they'd make it a button. They don't do any of these things.

When a user goes to checkout of any online store, they're not going to read everything on every page. It's a process they're very familiar with so they're going to skim and click through quickly. I know this, you know this, and JustFab knows this. That's why the program details are listed on the first page of the checkout process and not the last. That's why they're listed on a page where the user has but one action to take. Click the big pink button and get on with the checkout process.

JustFab is not an awesome company as you claim. It is a scam and you are a horrible investor for investing in them.

-----


Absolutely agree with this comment. Here's the impression that I see at a "first glance" that page:

1.) The item to purchase, along with the price of the item. 2.) A bright magenta "Continue Checkout" button. 3.) An ad for an upsell on the right hand side which I'm generally not interested in. (on the right side, light grey text, etc)

Only after carefully scanning the page do I notice the following:

3.) This isn't an ad, it's actually something important for me to read. 4.) There is a tiny magenta link on the right hand side with explanation text that says to click it if I don't want to save 50%. 5.) Way down at the bottom of the page is text.

So I went ahead and did try it out myself. I borrowed a friend's laptop (that doesn't have a developer-level screen resolution). The screen resolution was 1333 x 768 and FF is maximized there. Here is what it looked like http://imgur.com/9rHhhLV

What's missing from that page, is all of the important information about the VIP program. What is present is the price of the item, the quantity and a magenta "Continue Checkout" button.

I'm definitely calling "Dark Pattern" on this one. Hiding important text off the screen, coloring the important text a light grey, even when the text is visible it is far down the right side in a small font.

-----


Yeah, I'm incredulous that anyone could argue that VIP membership is obvious. There's a box that gives you the breakdown of the charges, Subtotal, Shipping etc. that doesn't include the VIP membership... In fact the only indication on the entire page that you're joining the VIP scheme is the magenta link you mentioned. It's smuggled through at the bottom of an ad box(where everyone applies a degree of visual filtering automatically) and the copy isn't exactly obvious. "No thanks, I don't want to save up to 50%" is a long way from "No thanks, I don't want to be a VIP".

-----


Even worse, should you click on 'Checkout as a Pay As You Go member', the order summary still shows VIP status. It appears there is no way out.

-----


It's because the shoe itself is the first item in the VIP membership by nature. If you buy something, you're buying into their whole service.

-----


This is the end result of blind A/B testing.

-----


That's the most generous interpretation I can find. Still not an excuse though.

-----


Also with you on this. The checkout flow is deliberately misleading. Sorry Mr. VC, you DID do your homework and the fact that you still invested is telling.

First off, what is the "happy path" on this checkout page? Right, totals + shipping costs + grand totals + checkout button. What else is hiding in this element? "Promo Code: 50% off your FIRST item", emphasis mine. What this is telling the consumer, is NOT that you are signing up to the VIP program and getting a discount because of it, it's saying "hey, since you're new, we are giving you a discount".

Would a consumer walk away from the happy path with the assumption that they had signed up to a subscription in exchange for the 50% off for their first item? No.

Yes Mr. VC, the subscription info is here on the page, but the location is not an anchor. The way the page is designed is to funnel the users attention down to the continue checkout button. The product designers knew this. At least GoDaddy puts their useless up-sells in the middle of the page, but they clearly give users an ability to opt out. They don't try to fool users by hiding them on parts of the page where they know they won't look.

Wow, I just said a startup is worse than GoDaddy. Getting frosty in hell no?

-----


At first, I disagreed with your tone and profanity. But now, after trying to checkout on that site myself, I realize that it's fair to treat people who knowingly aid scammers, this way. Especially when they are the ones who fund them. It's not like they are innocent little babies, right? They (the company and the investors) know obviously why the conversion rates are so high - Because they are very subtle-y scamming people. We must not encourage this type of shit. It will get back to us at some point. I am with you on this one.

-----


> They (the company and the investors) know obviously why the conversion rates are so high - Because they are very subtle-y scamming people.

Indeed. This website could be used as an example on http://darkpatterns.org/

UPDATE: I have emailed Dark Patterns, I hope they feature it on their site.

-----


Exactly. I think one of the failures of the current system is that we assume that people are rational. We are not and marketing makes ample use of it.

The company is not providing a better product (shoes) or a better customer experience & support. They are not making the world a better place. Their business model is to make most of human weaknesses. To me, that is not morally right.

-----


I find Dan Ariely's books on human irrationality very interesting and very easy for normal people like us to get into.

https://en.wikipedia.org/wiki/Dan_ariely#Publications

-----


> When a user goes to checkout of any online store, they're not going to read everything on every page. It's a process they're very familiar with so they're going to skim and click through quickly. I know this, you know this, and JustFab knows this.

This is the key point. If I know, you know, and JustFab know, then JustFab is without doubt acting in deceitful behavior. The act of deliberately portraying a subscription as an sale, usually comes down to the FTC (and sometimes State law) under the heading of False advertising.

Going to justfab website, nowhere on the front page or in the catalog does the word "subscription" become uttered. Not even in the linked checkout images is it mentioned. Justfab could argue that "everyone knows" that a VIP membership is the same as subscription, but it would be up to them to argue and prove that.

The front page especially could also be targeted, as it states clearly that 2 pairs goes for 39.95, and uses the word "buy" to describe it rather than subscribe.

-----


For adding to your argument, I have a VIP membership at Qatar Airways and it does not include a subscription. So as you say, one does not automatically means the other.

-----


I argue the term "VIP membership" is in itself deceitful on purpose. A VIP membership means nothing, and certainly doesn't mean "subscriber."

"I have a subscription to Wired magazine."

"I have a VIP membership to JustFab."

One the meaning is obvious, the other is meaningless without context.

When you sign up for a site, and create an account, you can be considered a member. I am a member of Hacker News. The VIP is just a potentially meaningless quantifier, some sites like to say "our members our very important people to us."

-----


I suppose it isn't exactly Blue Hippo, but they'd have to be pretty obtuse not to know that it is misleading, regardless of whether it is the old or new version of the page.[1][2]

Take for example item number three shared by both in the side bar: "Skip The Month" or "Skip any month".

This isn't the usual lowercase English word "skip", it is a special "Skip", short for special terminology "Skip the Month", their official term for actively declining within a five day window, not passively skipping a purchase. (The official terms and conditions[3] specify "Skip This Month" rather than "Skip The Month", but that may be another issue.)

Its meaning could be ambiguous if the reader is adept at incorporating new usages for words as they are being defined by the surrounding context. Or, the reader could skim the headings, or the reader simply lacked the reading comprehension skills to grasp that the meaning had changed in the text below the heading.

These challenges can be out of reach for a large majority of adults. Glance at the National Assessment for Adult Literacy[4], see the descriptions of the difference between "intermediate" (44%) and "proficient" (13%), and compare the difficulty of sample questions[5] with the comprehension level needed to grasp the message. (Complete reports can be found here: http://nces.ed.gov/pubsearch/getpubcats.asp?sid=032)

This extremely poor communication that never seems to happen when people benefit from their customers understanding what they are trying to say, and makes it pretty difficult to deny that their business is based on misleading people.

[1] http://i.imgur.com/3di93.png

[2] http://i.imgur.com/d02xmsy.png

[3] http://www.justfab.com/index.cfm?action=home.terms_and_condi...

[4] http://nces.ed.gov/naal/kf_demographics.asp#2

[5] http://nces.ed.gov/naal/sample.asp

-----


That's a good call. If while speaking to someone, you told them they could skip the month, they would likely think that no action is needed. Then, the average user's attention is probably gone by the time they get to "Skip as many months as you'd like." At this point, they'd probably be satisfied, stop reading, and never get to the part about "If you do not take action..."

Also, wow. Looking at the progression from the old page to the new page, it becomes obvious that they're trying to hide the "VIP Membership" details.

1) The right-side column has become more narrow.

2) The right-side column becomes almost entirely devoid of color.

3) The right-side columns now uses grey instead of black.

4) The 4th item, originally headlined with "If You Do Not Make A Purchase Or Skip The Month By The 5th, You'll Be Charged $39.99 For A Member Credit On The 6th" in large, bold font is now moved to the end of the details on the 3rd point and changed match the same light, small-print font as those other details. As a side-note, this point is also the 2nd-to-last sentence in the right-side column; this could arguably make it worse since anyone skipping to the bottom would read "Each credit can be redeemed for 1 JustFab item, so use it to shop later!" and think that it doesn't sound bad.

5) The old page requires you to check a box to "accept the terms of the Just Fab VIP Membership Program."

On the old page, the only other stuff on the page appears to be the form. I'd wager that most people viewing the page would at least glance at the right-column's text, thinking that it's instructions. For that matter, moving the membership details to the order summary page from the payment & shipping page is in itself a way of playing it down.

Seeing the two pages side-by-side, I cannot imagine that many if not all of the points described above were specifically designed to lessen likeliness of the user actually reading the membership details.

-----


Regarding your reference link [1], I just noticed another devious strategy. At the bottom of the page, the "I accept the terms of" is in black for higher visibility while the "JustFab VIP membership program" is in pink. Now, Black on white is easily more visual than hot pink on white. And since the hot pink is next to the black, its visual contrast reduces even more. Combine that with the fact that users are very highly likely to tick a checkbox, any checkbox with the phrasing "accept the terms" it makes this even more sinister.

Regarding link [2] I'm unable to even find a way to 'escape' the subscription process. Oh, no wait, it's again present as a "Checkout as Regular member" again in a hot pink on white scheme while the other giant CONTINUE TO CHECKOUT is in a more contrasty white on pink, and it's larger. Also, wait, if that's the regular member checkout link, then what's the giant checkout button do? Bam, chicanery yet again.

-----


woah! are the yusing the "i accept the terms" checkbox to ask if the user wants subscription? NO WAY! How much more deceitful can you get? What frequent user of the internet would even stop to consider that this is NOT the usaul "i accept" but a SPECIAL one?

-----


Agreed, complete scam. From that image it looks like you are making a standard purchase for a pair of shoes, and possibly just signing up to their site. Its only if you read in detail everything on that page and get down to 3 in the bottom right that it finally says you will be charged a monthly fee.

-----


And remember, my fellow entrepreneurs: if an investor is ok with cheating customers, there's no reason to think they will have a problem cheating you.

-----


Not only that, it contributes to a culture of deceit in the valley (and in tech entrepreneurialism, in general).

This is the same mindset that led to Groupon being funded so heavily. Both seem to be classic examples of the "bigger fool" investment model. We all know it's not a sustainable or ethical business, but investors dive in knowing that with the kind of revenue numbers this sort of thing can exhibit for a short time they'll be able to unload their shares to less savvy investors in a year or two, before the reality of this business sets in (or before the law steps in and makes them act right...like a thousand other retailers that make a modest profit and provide good service and fair dealings).

Investors that fund stuff like this should be shunned by entrepreneurs (hard to do with Groupon's investors, as a lot of smart money went into Groupon). Get rich quick schemes should not be how we build the future.

-----


Can't be modded up enough. A person who is nice to you, but mean to the waitstaff, is not a nice person.

-----


this!

-----


Double agree.

Not delivering value for dollar is called one thing: a scam. It might be letter of US law legal (which doesn't have a stellar consumer protections record), but it's dishonest as predatory lending and crap hawked from backs of magazines.

TL;DR Series A investor is trying to rationalize legitimacy to himself in the face of overwhelming conflicting evidence. Don't worry chap, denial is the first step toward accepting you dumped cash on a charlatan. Hopefully it won't end up in plastic barrels in the desert.

The number to cancel VIP is 1-866-337-0906 (as seen on TOS)

-----


Exactly. It's a bullshit scam. The entire page guides you into signing up for a "VIP" style, but always looks and feels like you're buying a single pair of shoes. It is a scam, plain and simple, and their recurring income is from the privilege of sending poor unwary consumers a new pair of shoes every single month without their full understanding.

It's no better than the mail-order monthly subscription scams of olde. Perhaps people invest in those too, but no one in their right mind claims it's "a great company."

It's a scam using classic deceptive marketing methods. No debate, no question.

-----


"It is a scam, plain and simple, and their recurring income is from the privilege of sending poor unwary consumers a new pair of shoes every single month without their full understanding."

Actually they don't send poor unwary consumers any shoes, they give poor unwary consumers "credits" which most likely got unnoticed and unused.

-----


What do you think the chances are that they send an email every time the customer is charged, listing their "points" and benefits thereof?

-----


100%.

They send an email every month prompting members to visit the site to select a pair of shoes or skip.

-----


What's the probability that the customer is unaware that this is a "membership" email rather a monthly email sent because you signed up and bought once? It's not uncommon for Newegg or Amazon to send you emails.

-----


Sure, but presentation is everything, especially when using dark patterns. What's the subject line, a general marketing slug like, "What's New at...", with a little bit about points or whatever at the end of the email, or something more specific to the nature of the subscription?

-----


Seeing the comments, I wonder if the only person he was trying to convince was himself.

From what I see in his comment, it looks quite like a rationalization attempt.

-----


This "inventor" wouldn't be the first in line to place profits above people. Most VC's I know don't give two shits about the human elements.

Yeah I know, it's sad.

-----


Came to say this. I can smell class action against JustFab.

-----


Actually, when you agree to the terms of service, you conveniently waive the right to participate in a class-action lawsuit.

Source: http://www.justfab.com/index.cfm?action=home.terms_and_condi...

-----


Are there such things as statutory rights in the US? In the UK, they wouldn't be able to force a waiver of a statutory right.

-----


No, actually, that never holds in court.

-----


These types of "agreements" are never intended to be heard in court. They're to scare the average user. Sort of like what patent trolls do (try) to victims who choose to fight.

This is how low down this company is. At the level of patent trolls. Disgusting.

-----


Unfortunately, thanks to a recent SCOTUS decision, it probably will.

-----


Which case was this?

-----


AT&T Mobility LLC v. Concepcion, among other recent rulings.

http://arstechnica.com/tech-policy/2011/04/scotus-rules-att-...

http://blogs.reuters.com/alison-frankel/2013/08/22/how-scotu...

This is why they can require you to waive your rights to participate in a class action. If you look at the ToS for every company you do business with, you'll probably find that several of them were revised almost immediately to take advantage of the AT&T decision. (PayPal comes to mind.)

IANAL but my understanding is that class action lawsuits are basically done at this point.

-----


It does now. See AT&T Mobility LLC v. Concepcion.

-----


Yeah, that doesn't mean a thing.

-----


A class action lawsuit has already been filed.

http://www.scambook.com/blog/2011/10/justfab-com-justfabulou...

-----


Agreed. This 'investor' is full of shit. Per their own screen capture, there is no line item for 'VIP membership' in the cart section of the page. As such, it reasonably appears that the customer is buying no such thing. But, in fact, they are!

The presence of the sidebar is irrelevant, as it is in no way visually associated with the current transaction.

-----


I hope this ends up as the most upvoted post in HN history.

-----


I came to it knowing the OP's story and still had to think for a minute to realize the pre-checked VIP option was the monthly thing the OP described. What hope does someone without so much information have?

-----


If investors get a good ROI all legally they might be horrible people but not horrible investors.

-----


I just went to the site -- you can do this -- picked a random pair of boots and put them in my shopping cart. I then clicked checkout, and here is what that page looked like:

The reason for the dissonance here is that justfab.com works just like a proper shopping site (in fact very like fab.com), except it's also a subscription site which signs you up for subscriptions. This is a dark pattern which uses user expectations (this is a shopping site), to sign them up for something that very few people want (book clubs for shoes). If lots of people did want this, the site could be far more honest about what it does, but it's telling that it presents itself as a checkout first and a club second (in a sidebar that many won't read), and requires action every month in order to skip a payment. How do you buy the product you're interested in, is that the tiny 'checkout as a regular member' link on the right?

It's entirely up to justfab.com how they present themselves of course, and I do dislike internet mobs piling on to criticise a company, but I thought it might be useful for you to hear the measured reaction of someone coming across the page for the first time:

I'm surprised, having heard of fab.com, that you trade under the name justfab.com - this seems a little shady to me, but perhaps it's just a coincidence - I see that justfabulous (now justfab) actually started first.

Looking at the home, I see no mention of subscriptions or subscribe, even in the small print. If the default experience is a subscription, that should be your big selling point, not something hidden away - this makes me distrust you once I find out what the company does.

I'd never expect to be auto-signed up for a VIP program - if it is a VIP program, how can it add everyone automatically? That is not what VIP means and is misleading - this makes me distrust you.

On the home page, the clearest message is that this gives you recommendations, there is no indication of subscriptions - this makes me distrust you.

On the shopping page, the layout is very confusing if this is a subscription and not a purchase - there should be a clear choice, with equal weight, between buy and subscribe. Text in sidebars won't be read by around half your customers, because usually it's meaningless fluff. Putting a warning in a sidebar suggests to me the company knows exactly what it is doing - this makes me distrust you.

The default should be to buy, not to subscribe, or at the very least there should be an explanation of why you should subscribe beside the buy button - when I find out the default is a subscription but is not presented as such, this makes me distrust the site so much I wouldn't ever shop there.

So this build up of distrust is an accumulation of small fibs or misleading statements which build up until I no longer trust what the site says. Now I'm not the target market for your site, but I find it hard to believe that the lack of mentions of subscriptions is a mistake, or that many other people wouldn't be tricked by it until they had signed up and realised their mistake in the second month.

Folks are right to be skeptical -- a lot of businesses have done this, tried to hide the fact there would be future charges. Does JustFab?

I'm afraid it still does in my opinion, yes.

Your summary above is a great statement of what you think works about the company, and how it all works, but it's at odds with the presentation of the site, which is far from clear or honest. If I hadn't read your statement from going to the home page and shopping pages I wouldn't have understood that subscriptions are the default.

If you don't want the site to have a shady reputation, it needs to be far clearer about what the proposition is to customers. Being completely honest and upfront with customers will lose you some profits in the short term, but make it more likely the site will prosper long term.

Perhaps consider a choice for customers - build up style recommendations and buy a la carte at higher prices OR build up style recommendations and subscribe for lower prices?

-----


Their target market is clearly "stupid customers who don't fully read pages and probably don't fully read credit card statements either"

-----


This is an old business practice that I remember from when I was a kid. There were a lot of second-rate publishers (books, in this case, but it worked for pretty much anything) which basically worked on a "buy a book now, and we'll send you a new one each month for <some really small price>". But you had to specifically opt out of this, which was done by ticking a very small box in the corner, in which case the prices for a single order would quadruple or something. Needless to say, refunds were out of the question.

I casually discarded those, blaming it on the new-found business astuteness of the society I lived in, but it seems this kind of scam is still around.

I'm calling it scam because, where I live, this type of business was actually considered a scam, and I think this went to the extent that they passed legislation to ensure their activity is regulated. They were required to clearly state the subscription model, in a separate box, delimited with clear colors and a bright background. Needless to say, they died out in less than a year.

The website obviously works, and is profitable, because it deliberately misinforms customers, and I think investing in this kind of business is very short-sighted. Not for you directly, since I presume it will bring you enough profit, but for the economy at large: this kind of activity adds no value whatsoever to anything, no one's life is substantially and essentially improved, all that happens is that some money change hands without producing any meaningful result. It's an economic plague.

I'm not casting judgement on yourself for investing in this business, particularly since I'm not willing to start a debate (on the Internet, of all things) about the "but everyone does it" argument. But defending this kind of shady practice is pretty low.

(Edited the rather rude words that were initially there instead of "pretty low")

-----


Exactly - it's a scam and if it gets enough traction hopefully it will be explicitly illegal soon (v.s. just arguably illegal via general anti fraud statutes).

See the <a href="https://news.ycombinator.com/item?id=6455718">comment</a> from "Semaphor" below; this type of scam is already explicitly illegal in Germany.

-----


On the checkout page, they are applying the type of behavior design/economics research done by Dan Ariely at MIT ("Predictably Irrational" http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_o...) and the Stanford Persuasive Tech Lab (http://captology.stanford.edu/).

-----


At least, these scams would ship you something! It would remind you they decided to scam you by sending you an overprice item. Justfab got the genius idea that it is much more profitable to have apparently nicely priced items that you won't order or receive but still be charged for.

-----


Pardon my french HN, but what a load of horseshit.

When I was a kid there was this mail-order thing called Columbia House Record Club. It was the same business model. They entice you with super cheap music.. if you signed up for a monthly subscription. I was a happy customer. Because I was smart enough to work the system, cancel in time and get a bunch of free CDs for pennies.

But guess what? Somebody was filling their coffers and it wasn't me. Columbia House made $500M/year. It was the regular folks who didn't pay close attention and didn't realize just how much they'd be charged on a recurring basis for stuff they didn't want.

So this VC's use of high customer satisfaction rates as a defense is utterly without merit. That's the nature of this business: savvy customers do well, but at the expense of another set of exploited customers.

Here's a great article on Columbia House, which calls it "one of the more dishonest and predatory marketing devices of the 20th century". It could just as well be about JustFab.

http://thephoenix.com/boston/music/129722-rise-and-fall-of-t...

Oh.. and now I have a really bad impression of Matrix Partners.

-----


It may have been shady but even 8 year olds could tell that it was a 'club' and not a 'store' and knew that you had to cancel. It was "Join the club and get 8 CD's for free' not the other way around with small print. People just forgot to cancel or would stick with it for a while and then realize they weren't getting value. This is a different thing because it is intentionally masquerading as an online web store. Even other online services that sell subscriptions are designed differently.

This is making money off of deception, not consumer laziness like Columbia House was.

-----


Yes, you're right—Colombia House was less scammy and more reputable than Justfab. They're lower than pond scum.

-----


And at least Colombia House actually um... sent you something.

-----


Sending you something you don't want is worse than adding a credit to your account for a future purchase of your choosing, IMO.

-----


However, Columbia House was specifically advertised as a "club". It was even part of their name!

This JustFab business is much, much worse.

-----


Not the OP - but I did take a look at that page, and I do find it misleading.

The "checkout as a regular member" is in a small font on the sidebar, while the main CTA is big, bold and defaults to the VIP program.

The part where you're told about the monthly fee is in the last sentence of the sidebar. I had to practically hunt it to find it - for most people shopping online this will be oblivious.

By giving the screenshot - atleast to me, you have proved without doubt that the site is indeed misleading.

[Edit: grammar]

-----


Agreed. Only at the very end of the right column which most users will not read to is the mention of the charge. "Activating your VIP service" could easily be interpreted as being free given the purchase. Regardless of their numbers, it is definitely not obvious that there will be a monthly $40 charge. (The fact that they do give a credit for the charge makes things not 100% scummy I will say)

-----


Second that. Smallest font on the page, light grey while everything else is black, pushed to the bottom of the side column - certainly looks like fine print to me.

There's no option to opt out of VIP membership - if I haven't said I want it, and was not asked whether I want it, I shouldn't be paying for it, should I?

I think OP has a case here.

Do they ever try to remind customer about the upcoming charge?

-----


I don't accept the word "misleading" -- I do not believe the page in any way misleads. It does not try to position it as anything other than a subscription, and the language is plain english.

Could they put the subscription details in bold? Could they use a larger font than all the other text? Sure. It's a tradeoff, for sure, and every retailer has to optimize their site to perform. Could they pop up three boxes after you click yes and say, "Are you sure?" "Are you really, really sure?" -- (yes, I know I'm being ridiculous) -- but yes, it is a tradeoff.

But with an NPS score in the 50's, nearing a million subscribers with very low churn rates -- happy users -- as investors we feel the business is healthy and being managed in an upfront way.

But, I can see how one might feel they would like it bolder or more prominent -- reasonable people could disagree on that.

I would submit that, when you come to view the site under the lens of clicking on a discussion about a fraud, and then go to it to decide if it is a fraud, and you (probably) aren't a likely customer and don't think "damn, that's a hot pair of boots for $40", you end up with a different lens.

-----


As someone who spent a lot of time optimizing conversions, it painfully obvious that they are optimizing to not be clear. If the subscription was so valuable, they'd message it as a top level value prop. But you're not dumb, their not dumb, so I don't have to tell you that.

I honestly can't believe they get away with, nor have the balls to even do it in the first place.

I actually wrote the ATD reporter who held their feet to the fire a little bit last week. He should've done far more.

While we're at it, let's take a look at above the fold of the how it works page on A BIG Apple monitor. http://d.pr/i/tCVH

So obvious it's a subscription there right?

How about the homepage? http://d.pr/i/1BVn

Clear as day right?!

I mean your rewards page makes it sound like you're telling a friend about personalized recommendations. Might as well be messaging those units at the end of an article "Selections recommended for you...."http://d.pr/i/YmIT

I can't even tell if your gift card page is signing up the person buying a gift card for a subscription or what is going on there.

And btw, might want to have legal look at this language at the bottom of your gift card page because I'm pretty sure it's a violation of California's gift card/certificate laws. http://d.pr/i/SDS

It's also funny that the phrasing "no obligation to buy" is all over the place.

When in fact obligation is legally defined in the civil sense as a contractual compelling promise for a course of action.

And that the word buy is also defined as the exchange of property from one part to another by way of an agreement.

And I'll talk slowly, property in that sense doesn't have to mean goods.....property can be money too.

So by purchasing on JustFab you are most certainly signing an agreement that compels you to exchange property with another party unless you cancel the agreement thereby removing your obligation.

So really, during a 5 day window at the beginning of every month you have no obligation to buy.

Miss that window and you don't even have a say in the matter!

It's also very telling that the FAQ section contains no section on "how do I cancel my VIP membership and stop getting billed every month?"

-----


You shouldn't have been downvoted here, but the mob has been angered! I'd encourage you to ignore the insults and consider carefully the other feedback - there are some good points made here by people coming to the pages for the first time.

Re your point above, What they could do which is very simple is to change the button text to 'Subscribe'. If you'd be reluctant to do that, ask yourself why that is? Why can't you tell the truth here with the button text?

Is it because it would put people off? If so you (I'll use you for the site) need to explain to them what they're getting and make them want it, not try to hide what they're getting and make it seem like they're buying when really they're subscribing.

Someone thinking "damn, that's a hot pair of boots for $40", should also be aware that it's not really for $40, it's for $40 each month for x months, with the promise of more boots to come. If they want that, you should be able to tell them that right beside the Buy button.

Personally I'd give them a choice of high price to buy or lower price to subscribe, as I think that succinctly sums up your value proposition to customers, AND makes it clear what you are selling (you are not selling just a pair of boots). In fact I've just seen below in an image someone linked that is exactly what you do on the German site:

http://imgur.com/uIZ5JX3

-----


If the German site is different because Germans have laws to protect consumers, it kinda give the scam away. All that regional sites could easily be the same, but there there are less or no laws, the scamming continues.

-----


I would not be surprised if German law forbids the buy-and-subscribe trick. I would LOVE to hear about the German profit's of this company.

-----


> I would not be surprised if German law forbids the buy-and-subscribe trick.

It doesn't, but it mandates actual costs to be displayed very clearly. This is relatively recent, though - probably as a result of the very successful Jamba/Jamster ringtone scam business that used exactly the same mechanism in the early 2000s.

-----


The German site is a nice example how it should be done! Kudos!

-----


The German site is definitely less misleading than the US site but I wouldn't say it's a nice example for how it should be done. I think the list in the VIP checkout column is missing information about the monthly charges (€39,95? - not sure that's what they are charging in Germany since, well, the site is unclear).

-----


They would never get away with the style of their English site in Germany. Honestly, I doubt they will get away in the US in the long run.

-----


Oh come on man. This is some serious fucking mental gymnastics.

At the very least there needs to be a checkbox a la "I would like to receive spam" or "I would like to give you $480 per year in addition to the $40 for this pair of boots I want." Maybe even include the monthly price in the cost lineup there, since it's, you know, a major cost?

I don't often wish ill on companies, but I seriously hope that this company gets pummeled into the ground in a massive class action lawsuit, and that every investor that knowingly accepted and rationalized this fraud to themselves loses their investment. This is completely unacceptable behavior.

-----


A class action lawsuit has been filed 2 years ago...

http://www.scambook.com/blog/2011/10/justfab-com-justfabulou...

-----


It does not try to position it as anything other than a subscription, and the language is plain english.

Yup, plain english which is pretty loaded in the favor of subscription. Point me to one heading which says "VIP subscription costs only 39 USD per month".

every retailer has to optimize their site to perform

This is not the same thing. The typical shopping site constitutes of 1 time purchases. When I google for a product and end up on your site and try to purchase something, I am not going to think it's a crazy thing like monthly subscription whether I buy something or not. Given this scenario, choosing a default like that is not simply optimizing.

We can argue over the fine details, but you can't convince me that this is not shady.

-----


> We can argue over the fine details, but you can't convince me that this is not shady.

He's not trying to convince you, he's trying to convince himself.

-----


He looks pretty convinced here.

http://www.matrixpartners.com/team/josh-hannah/

-----


Invested in "Huddle" and "Huddler"?

That's weird. Is the idea to be sure if the brand works, one of these will be successful? Or just like the word "huddle"?

-----


> I don't accept the word "misleading" -- I do not believe the page in any way misleads.

How about:

* The important information (i.e. the monthly subscription) remains off-screen for anyone whose resolution is 1366x768 or below, coincidentally most of your target demographics, I presume. * The important information is styled like an ad, on the right side of the screen * The option to opt out of the program is not labeled "opt out of the program", but under the misleading "I don't want to save 50%"

In many European countries, like Germany, this is explicitly illegal and you can even go to jail for it.

This insulting type of rationalization is particularly useless on HN. Most of us like people with soft skills, but we passionately hate liars.

-----


> I would submit that, when you come to view the site under the lens of clicking on a discussion about a fraud, and then go to it to decide if it is a fraud, and you (probably) aren't a likely customer and don't think "damn, that's a hot pair of boots for $40", you end up with a different lens.

That's exactly the problem. We're aware that the website is trying to make us suscribe to a VIP program, and so we look for it on the screenshot you linked. A lambda user will never do it.

Frankly, I'm not a designer, but this screenshot is exactly what I would do if I wanted to make the block go unnoticed : did you notice that he is at the right, a place where usualy go ads?

-----


Yes, and I have a feeling that in a few hours, when the general internet is made aware of this, they, too, are going to go the website under the lens of >themselves< getting defrauded and the S will really H T F.

Thisgonebegood.gif

-----


This is a case of "just because you say something enough times, it doesn't make it true". Homie, I'm pretty certain that simply because people don't opt out, it may very well be because they don't realize they are paying for anything.. If the target demo is women who shop alot online, perhaps the charge gets lost in the bill (many people don't review their bills monthly). Is this smart? No. But it doesn't mean it's ok to exploit it. Trivializing the complaints to "they could make it bolder or add a triple pop-up"'is a real straw man attempt here... Of course, whenever we make a decision we will try to justify it - I'm sure you think you are a good guy and that so is your firm and so are your buddies.. so how COULD this be an unethical company? You say HN isn't the target demo - someone with a high buying temp for a good deal on shoes and not tech savvy -- and if hackers and developers and entrepreneurs are unclear on the offer, you think a 35 yr old mom buying shoes is going to "get" the offer more?

You want to prove the community wrong? Split test some traffic. Hell, put an exit popup that says "Before reading this, did you realize you just signed up for a monthly subscription site? Are you happy about that?" Do it with a 3rd party firm and track the results. Your personal reputation and your firms are on the line here, you may want to take it more seriously.

NOTE TO HN: greying out the down voted post in this context isn't useful - perhaps make it red or something? As this is the VC, his bs comments are actually interesting to read. Or maybe there is a setting to change that on my profile (hint, you could bury a $40 / month recurring charge inside changing my color prefs!)

-----


You can easily read the greyed-out comments by highlighting them with your mouse.

-----


Was on mobile when I commented I think..

-----


The frontpage talks about buying and what price of shoes are. In plain English, this is a sale, not a subscription.

In plain English, they could had enticed people to join a subscription, which in turn would give them special deals.

That would had been plain English, but they opted for the words "buy", "all styles is ...." and so on. Typical example of misleading.

-----


It's easy. The price for that pair of boots is displayed very prominently, as you'd expect from a shopping cart page. So why is the price for the recurring monthly subscription only mentioned in the longest paragraph of text on that page and not highlighted in a similar way as the shopping cart price?

-----


The language is plain english, but the most important and un-obvious fact about it - that it is a subscription deal and not an one-time sale deal - is mentioned only at the end of the wall of text and is not clearly and prominently featured. It's like advertising a car for $100 and then at the end of 10 page small-print document (in plain english) adding "plus 36 payments of $500".

I am still giving you the benefit of the doubt and assuming you are sincerely believe that it is a legitimate business that does not use any blackhat techniques to trick their users. But with each your comment it becomes harder and harder. It is very hard to believe that a smart man - like without a doubt you are - would not understand what is going on here. Pecunia non olet?

-----


Just a reminder folks, don't downvote just because you don't agree with what's being said.

Do downvote meaningless comments and clear spam.

-----


http://jacquesmattheij.com/The+Unofficial+HN+FAQ#downvoted

being factually wrong in the face of this many comments will invite my downvote.

> "It does not try to position it as anything other than a subscription, and the language is plain english."

In my opinion, that is simply factually wrong.

-----


+1 for the link, but...

>> In my opinion, that is simply factually wrong

oh the irony in that sentence...

-----


You may not accept the word misleading, but everyone who knows what that word means, does. The page definitely misleads. It does try to position it as something other than a subscription: it tries to position itself as a regular sale. The entire fact that it is a subscription is hidden at the bottom of the light-grey sidebar. The language may be in English, but it's still light grey at the bottom of the sidebar, and not anywhere near the actual purchase and pricing info that you're agreeing to.

"Are you sure?" popups don't provide any additional info. Explaining what you're signing up for does.

Those million subscribes with very low churn rates, are they actually ordering new shoes every month? Or are they people that haven't figured out they're still paying every month for that one pair of shoes that they liked? How do you know they're happy? Have you asked, or do you simply assume because they haven't sued you yet?

You're right that it's a tradeoff. It's a tradeoff between honesty and extra undeserved revenue.

-----


By optimizing you talk about misleading a small part of the users so that they pay the VIP fee without even noticing they are charged? Answer this simple question : do people receive an email to remind them they will be charged $39 this month so they should hurry picking a pair of shoes?

No wonder why you get a very high customer retention rate if ppl are not even aware they are customers.

-----


Screw you and your rationalization to mislead the users; thousands of studies show that the button people clicks is the big one: Like 95%; and in this case is "continue checkout" so you can save all your crap for the jury.

-----


"It does not try to position it as anything other than a subscription, and the language is plain english."

Except the page you highlight doesn't use the word "subscription". I wonder why not?

-----


A fair question to ask would be how much revenue is coming from the subscriptions vs sales of the product, and how many credits per user are unredeemed?

-----


The screenshot you provided is a prime example of a "dark pattern" where the process is designed to trick the user.

http://darkpatterns.org/

-----


Actually, this scam deserves to be there... Has anyone mailed it to them yet?

-----


I have.

-----


> Could they put the subscription details in bold? Could they use a larger font than all the other text? Sure.

> Could they pop up three boxes after you click yes and say, "Are you sure?" "Are you really, really sure?" -- (yes, I know I'm being ridiculous) -- but yes, it is a tradeoff.

What? No these are NOT the issues why it's misleading.

You should put the terms of subscription in between the shopping cart and the checkout button, instead of way outside any natural reading order.

The misleading bit is that there is NOTHING suggesting a subscription model, or even mentioning "look to the sidebar for the terms of our subscription" in between the item list and the checkout button.

This means, literally, there is NO REASON for the user to read about the terms of subscription. Because the checkout button, which comes first, leads away from the page. There is no reason to even expect the rest of the page to contain any useful information after the checkout button.

Read that last paragraph again. Because that is not a matter of subjective opinion.

You speak of "plain English", the plain English conversation between the webpage and the user goes like this:

(in plain English reading order)

- webpage: "in your shopping cart are the following items at the following price: ####. Would you like to proceed to checkout? Y/N"

- user: "Yes"

- webpage: "by saying Yes you have agree to subscribe and pay 40 dollars every month"

Does this conversation make sense? No! So tell us again, how does the website make it clear that there's a subscription in "plain English", because I'm not seeing it.

-----


People, please don't downvote this guy so much that his comments disappear.

-----


Should you bold the text? YES.

This is a very important action. You want to make it very clear to the user they are not just purchasing a pair of boots, but also subscribing to a service, since you are presenting yourself as a normal retailer!

Less scummy thing to do - include the subscription as a line item in the checkout. HOW HARD IS THAT?!!!??? Oh wait, that would make it clear what the user is actually purchasing. We can't have that.

-----


Do you think that the people subscribing to this are knowingly doing so? Do you think they have decided that $X/month is worth what they are getting?

-----


You're full of crap, and you know it.

-----


Hey -- You're awful!

-----


You know, when I read the OP my first thought was "there are two sides to every story". A lot depends on how the actual costs are communicated.

Then I saw your screenshot.

Your defence of this company has succeeded where the OP failed, in proving beyond a shadow of a doubt that this is an unmitigated scam. You should be ashamed for attempting to profit from such a thoroughly disreputable con.

> Folks are right to be skeptical -- a lot of businesses have done this, tried to hide the fact there would be future charges. Does JustFab?

Yes. Yes. YES! They've quite clearly worked very hard to hide it.

Have you received some sort of ethics bypass that renders you literally the only person in this thread unable to see that?

-----


I find this incredibly misleading. Absolutely no where on the home page is there any hint or mention of a subscription service. The user finds a pair of boots, decides to buy them and enters what appears to be a standard checkout process.

In the screenshot you uploaded, is a standard checkout screen you would see on any e-commerce site. The only difference is there is what appears to be an ad/upsell to some VIP program that I'm sure no one pays attention to.

I've done a lot of work in product & usability in the shopping/e-commerce space and in my opinion, this flow is intentionally misleading.

-----


Well said.

-----


* The VIP membership program information is not part of the eye flow from the checkout info to the nice big bright attention grabbing checkout button.

* Nor does it immediately stand-out as "This is something you REALLY need to read" rather than just normal advertising for an opt-in premium package,

* There is no "I have read and accepted the VIP stuff" checkbox in the checkout flow. User has to specifically opt-out by clicking a link no-where near the standard user flow.

So, not fraudulent technically but this seems like a clear case of a "Dark Pattern" and seems pretty scammy to me.

>It's in plain English, and in the same font size as everything else on the page.

The actual text saying "With this purchase you are activating your VIP membership program" is clearly smaller than the main text in the checkout (product name, prices etc).

> and the information is quite clear on the site.

Your opinion, I have to disagree.

[Edit] having seen the old page linked to by another user http://i.imgur.com/3di93.png is it pretty clear that the new page is much more deceptive (Old one had a checkbox requiring acceptance of VIP membership)

[Edit] Expanded opinion.

-----


> So, not fraudulent technically

It is in fact technically fraudulent in Germany, which is why the German version of the page looks different.

Still not super-clear on the details, but sufficiently "you're going to be billed each month" to let most people know it is a shitty deal, and the (pay once high price) alternative is clearly displayed at the same size (just not highlighted as much), at a high price to make people wonder "what's the catch with the other deal at 1/4th the price?".

-----


Hi Josh,

it's good of you to step up and have this discussion. It seems that justfab is using a Conversion Rate Optimisation trick that you're either not aware of or that you're deliberately downplaying. Put simply, the UI is set to have VIP membership activation default to ON. Those people who are not paying attention will not read the information in the right hand side bar, will check out and will mistakenly purchase the membership.

The simple way to fix this is to have NO DEFAULT. When a user clicks check out, you should show them a page with both options equally balanced. For example, you could have two radio buttons with neither option preselected. That way the user has to make an explicit decision to choose to become a member or not.

This is your opportunity to put your money where your mouth is. Get the justfab team to redesign it. Make it impossible for users to opt in by mistake. Rely entirely on users making an explicit choice. After all, if you genuinely believe that all of your valued customers opt in to the VIP membership by choice, then this redesign will not have any effect on your revenue.

Ball's in your court. We're all interested to know how you will play this.

-----


Very well said. I agree entirely - there should be a concrete change as a result of this thread. It's impossible for a reasonable person to read the opinions of the well informed people here and continue to think that everything's A-ok. This is an opportunity to prove your ethical bona fides, jdh.

-----


If you look at their profile on consumeraffairs.com [1], you'll find a ton of complaints about this VIP program on the first page alone. In fact, the company replies repeatedly with a canned response.

They are well, well aware of what they are doing. If they do change anything, it will not be because they have been suddenly educated or even found morality. It will be because the sunlight is so bright that they fear for their ability to continue to profit.

[1] http://www.consumeraffairs.com/online/justfab.html

-----


Here's a question:

Upon learning that many of your customers are unhappy and believe themselves to have been tricked into subscribing, do you:

a) change the process, or

b) defend the process?

-----


Exactly. The fact that they have devised what appears to be a canned response for the issue is telling.

-----


> Hi Josh, it's good of you to step up and have this discussion.

He's not having a discussion, he quickly tried to "defend" this website, as if he really believed it is not misleading, found that everyone saw right through his dishonesty, and cowardly retreated from any discussion.

> The simple way to fix this is to have NO DEFAULT. When a user clicks check out, you should show them a page with both options equally balanced.

This is exactly what the German version of the site looks like[0]. Because these sort of misleading practices are considered fraudulent in Germany.

Fraudulent.

They know perfectly well how they are misleading customers and feel they can get away with it, except in Germany. I wonder if they make any profit in Germany?

[0] the German version is no longer flat-out misleading, it still could be a lot clearer, but at least the offer is so fishy, it stinks.

-----


First I want to thank you for bothering to defend yourself here in public. When a conflict exists between two parties, the best chance for resolving it is when both parties are able to present their respective cases.

I am about to get philosophical.

If we look immediately at what it means to invest, what we come up with is a profit equation. One tries to maximize the expected profit of an investment, taking into account risk.

But let's try a thought experiment. What if you had 1,000 times more money than you do right now? So if you're a millionare, you're now a billionare. Would that change what you invest in? In what ways would it do so?

Would you start making even larger investments, with even larger returns? If so, what if you had 1,000,000 times more money than you do right now? At what point does profit for profit's sake become pointless?

I think that deep within yourself, you know that investing is not merely about profit for profit's sake. Somewhere in there I think you recognize that by choosing what to invest in, you have an awesome power to change the world. You have power that extremely few people have. You are, in essence, the real life equivalent of a super hero.

Based on that, let me ask you this question:

Is this really how you want to change the world?

Is this truly how you want to spend the vast power you have at your disposal?

-----


Wow, that was a little too deep than could be appreciated by (Probably) some capitalist looking to just make some goddamned money

-----


Super hero... you've made my day!

-----


I'm not sure what I'm more upset by, the fact that JustFab is clearly a scam or that you find ways in which you twist this to justify it (to yourself, maybe?).

That image you link contains the text 'if you don't take action between the 1st and the 5th of the month, you will be charged', how about 'unless you wish to buy another product you won't be charged' instead?

The whole flow of the page is set up in such a way to make it seem like this is a one-time purchase, if you wanted to play nice you'd make the payment button read 'continue to subscribe' instead of 'continue to checkout'.

Disgusting.

-----


Wow. I can't believe you are justifying that screenshot. This would have completely deceived many of my non-technical friends.

- When you buy shoes, you pay for shoes and not a monthly subscription. That's what people expect when they see 'Checkout'.

- Even after looking at the screen after reading this post, nowhere is it entirely obvious that I'm about to sign away $40 a month.

- reg $69, VIP $39. Looks just like a regular discount.

- I went through the checkout process, until the last payment screen. I don't notice anything saying that this is a recurring charge.

OP was being nice. This is dishonest and borderline fraud.

Edit: FRAUD.

-----


You sir a full of shit (and clearly unbiased). JustFab has become fairly well known in the UK for pulling this cheap trick on unsuspecting customers, I've even seen it reported on TV news.

Due dilligence my ass:

https://www.google.co.uk/search?q=justfab&oq=justfab&aqs=chr...

http://www.consumeraffairs.com/online/justfab.html

-----


If you really believe a word you've just written, here's my suggestion. Change the page so that by default you're not joined up to the VIP program and shoppers have to specifically opt-in. If the text is as clear as you claim, you'll still get roughly the same join up rate because the deal is being made is brilliant and it's perfectly clear what's happening, right?

-----


A note on this: I do believe the website to be a scam and parent to be obtuse or lying, but for the specific case of your comment studies have proved that people are more likely to stick with the default choice made for them, so you example wouldn't work. Even if the two offers were providing an absolutely identical end value, the default one would have more adoption.

-----


Good point.

The reasonable solution would be to leave it the default option and just make it much more clear what is happening after you buy the shoes.

-----


Or offer 2 equally sized checkout buttons next to each other: "Checkout" and "VIP Checkout"

-----


I usually don't do this but I hope you'll do some time in prison for this scam.

You can do mental gymnastics all day long if you want to, but it'll be hard to find anyone that doesn't think that what you are doing is malicious fraud.

Edit: I see you are the founder of eHow (content farm) and Betfair (gambling). It doesn't surprise me at all. Maybe next time you could invest in human trafficking and brothels.

-----


For what it's worth, eHow only really moved towards being a content farm after being sold to Demand Media. I don't think it's fair to compare legalised gambling with human trafficking...

-----


You are right, it's obviously not comparable to human trafficking.

I'm just making the point that this guy has a history of founding shady companies, therefore it's not surprising that he can't see why JustFab is a shady company.

-----


Gambling isn't, in itself, shady. Educated adults know that there's a risk. There are the compulsive types for whom it is a problem.

On the other hand, search for "Betfair doesn't pay out" and you see dozens of stories, often by 'big media', of repeated and numerous instances where Betfair has suspended accounts that have won money, and even voided all bets on an event where they stood to lose a lot of money.

-----


I'm sorry, but yes, that's a very tricky site.

There are about a bajillion ways to make it much more clear what you're actually paying for. Not even complicated, "Well we need to hire a UX designer and do some study" type stuff. Just straight-forward, common sense things like adding the price of the membership as a line item.

So, yes, you've invested in a company which is actively hostile to its customers.

-----


It looks like a class action lawsuit was filed against JustFab. The complaint starts like this:

   "Plaintiff Edna Betances-Harold, on behalf of herself and others similarly situated,
    brings this class action complaint against Defendant Just Fabulous, Inc, based on 
    its practice of deceptively marketing and billing consumers for unauthorized 
    charges relating to its retail website."
Does anyone know how that class action went, or how to find out?

Source: http://www.scambook.com/blog/2011/10/justfab-com-justfabulou...

-----


Are you kidding? Even though I knew what I was looking for in that image, it took me a long time to find the information that there will be a charge every month. It is at the very bottom of the page, in the fine print.

I believe you that you believe in the honesty of the company, and that you have the best intentions. Clearly this semi-scam works for you, but if you really want to feel good about yourself, I recommend stepping on that companies toes and make them present the information in an obvious way.

Also wondering about the law - I am pretty sure that here in Germany that kind of thing wouldn't fly, meaning customers wouldn't be obliged to pay up (although some probably would because they don't know that). Are there no customer protection laws in the US?

-----


Same here, it's very clearly unclear in what is going on with that VIP program. That's not a failure of the site visitor at all but certainly will be the first thing anyone hungry for their money would say.

It seems like further proof that the plan is to separate suckers from their money.

I'm not overly familiar with consumer protection law here in the US but if it exists it wouldn't surprise me to see it haphazardly enforced if at all.

-----


I was with you up until the screenshot - that's a completely disingenuous way to present some pretty vital information. It's a textbook example of a dark pattern[1].

[1] http://darkpatterns.org/

-----


The checkout page you links deserves a notable place within Dark Patterns. (http://darkpatterns.org/)

But lets break down exactly why that page is designed to trick a significant number of customers into purchasing something that they did not intend to purchase: * All the VIP information appears in a box that most shopping websites use for advertising or shipping FAQs. Many average readers (note that I do not say all), would fail to even glance at that box. * The 'checkout as regular member' button is in a completely different flow of the page, and of a different size. On the one hand, it would probably be ok for one of those two things to be true, but to make them both true they know that some customers will simply think there is only one checkout option when they scan the page. * By far the most scammy part of the page is the fact that the payment does not appear in the shopping cart or subtotal box! People reasonably expect that with online shopping, everything they will be paying for appears in the shopping cart.

Many of those things on their own would probably be ok. You could just claim that it is a page optimised for converting to the VIP program. However, the combination of all those things are designed not only to convert people legitimately interested in the VIP program, but to also convert a sizeable number of people that skim read the checkout page.

-----


I am sorry, but any company that does not explicitly gets consent for paid membership but tacks it on another deal is dangerously close to a scam. I understand that asking forgiveness is much more profitable than asking for permission, but IMHO it reeks of dishonesty and trickery.

In fact, I've opened the homepage of justfab and it does not mention subscription anywhere on the homepage, just the 39.95 price which any reasonable person would conclude is one-time deal and not a recurring subscription. It is mentioned only once on the very end of "how it works" page, as if it were an insignificant detail. Such detail like recurrent charge I think should be prominently mentioned. If you buy a loaf of bread in the store, you don't expect to be automatically enrolled into "bread appreciation club" that would charge you each month, do you?

The companies that behave in such a manner and try to trick customers into something that is not at all clear for them what they are agreeing to not only hurt the consumers, they hurt the whole internet sales ecosystem. Now what I would say to a relative or friend who is not adept in recognizing all tricks and fine prints? I would say "never buy anything at all from a store you don't know and that somebody who knows all the tricks have vetted". Which hurts the whole system, now every newcomer has to work harder to prove he's not one of those scam ones and it not going to trick you into something you don't want to do.

-----


I'm not 100% sure but I think this site would not be allowed in Germany because of consumer protection laws. In that regard it's very telling that justfab.de has a very different checkout:

http://imgur.com/uIZ5JX3

-----


That looks better, but doesn't mention that the membership comes with a monthly fee. Pretty sure it is illegal in Germany.

I think the law in Germany even states what kind of text is appropriate on the "buy now" button.

-----


We can not know this from the screenshoot alone. The membership itself is mentioned.

Maybe the fee is mentioned on a other screen.

As far as i renember it is not really "illegal",but the contract is invalid.

-----


I think the law in Germany is very specific in how obvious it has to be what is being purchased and what it costs. Some mention somewhere in the fine print is certainly not enough. I've heard they even specify texts for the buttons, it has to be something like "buy now" to make it clear that the action will lead to costs.

-----


I didn't check what followed, they might well have mentioned the specifics clearly on a follow up page. My point was simply that this is already far clearer than the scammy .com site.

-----


But I am. It is illegal, to automatically opt-in for such a service during check-out.

-----


I find even that misleading because it doesn't mention the monthly fee. I'm pretty sure you could refuse to pay it and win in court.

-----


Alas you do not get the option to refuse to pay. They keep your credit card details and charge every month.

You're then stuck arguing with your card issuer. In the UK for example, you're shit out of luck unless the transaction is > £100 where the card company becomes 'jointly and severally liable' which allows you to pursue them instead.

Obviously this varies so it all depends on where you are and where your card was issued as to how much chance you have of 'refusing to pay'.

-----


In US, credit company would usually side with you, and if you say the charge is not authorized (esp. if there's no actual paper signature) you'll get money back. But for that you need to watch your bill closely, not everybody does that.

-----


That's pretty astonishing actually.

-----


"credits never expire. If you have 8 credits in your account, you can go get 8 pairs of shoes."

It is called breakage. If they do not expire now, they will start to expire soon. What good is it to accumulate some revenue, if you cannot claim it has no cost associated to it? Either you do not know what it represents, or you are playing a good card. Sorry for the sarcasm to start this, but it sounds fishy.

I have no ethical problem with sites that make it easier for customers to get an on-going service (a subscription), when it is more convenient to have it than the opposite. (cellphones, gas, electricity) In this cases, it is much more cool not to have to deal with $39 or whatever amount it is decided that the store wants to discount to call you upon that private VIP club. It is dirty pricing.

And yes, I did go to the link you provided, and I did noticed that it is not necessary to read 2,500 words to figure out that the company is walking a fine line in between ethics and law. Bravo, for the tack-team, probably composed of some 5th av creative minds and some hard knock lawyers.

But this does not exclude the fact that IF the site wants to be ethical, and IF it gets at least a very little percentage of its revenue due to this, it should try hard, very hard; to tell people that visit their site for their first time, that a little fuck you contract might fall in their lap that very day if they are not fully aware of what they are doing.

In fact, it it happened once, and you realize, it may be possible that it has been misleading, you should change it.

I really hope a more transparent player comes along and have you guys think about this very concerning issue deeply.

Sleep tight.

-----


I'm curious if, during due diligence, jdh and the other investors were given access to Justfab's chargeback rate on the subscription fees, and whether/how many merchant accounts maintained by the company have been shutdown. Having just looked at the site, I would definitely be misled by this, but that doesn't necessarily mean their core customers are.

Math doesn't lie: if chargeback rates are higher than e-commerce norms, then this continuity program is misleading. If they are not, then the program isn't misleading. I cannot possibly see how chargeback rates wouldn't be astronomically higher than the e-commerce average, but maybe I'm just not their target customer.

I would love to see a response to this comment with their chargeback rates for the subscription charges but I doubt I will get it.

-----


Just as important as the charge-back rate is the backlog of unused entitlements. Oh, and the median entitlement to age of account ratio.

-----


>Seems pretty clear to me.

I consider myself a fairly savvy internet user, and, even knowing it was there, it took me a good 20 seconds or so to find the part about a monthly charge in the image you posted.

The user attention is focused on the "continue checkout" box. It looks very similar to a part of the checkout flow at most other online retailers. Nothing in that box indicates a monthly charge. Nothing in that box even indicates that there's a choice between VIP and non-VIP. This information is relegated to the sidebar. In most websites, the sidebar contains non-critical supplementary information. Titling the sidebar with "VIP membership program" suggests to the user that the sidebar contains information on an opt-in (rather than opt-out) program that they can safely ignore if they just want to buy a pair of shoes.

It looks to me exactly like a dark pattern designed to trick the user into signing up for the monthly service without realizing what they are doing.

-----


"With this purchase, you will be activating your VIP membership" is in the sidebar. It's at body-copy writing, and you have to go looking for it.

This is a combined "Forced Continuity" and "Sneak into Basket" set of dark patterns that doesn't even given you the in-line checkbox to uncheck:

* http://darkpatterns.org/library/sneak_into_basket/

* http://darkpatterns.org/library/forced_continuity/

-----


I would click the button and continue on that page. It's clearly deceptive, and certainly I do not get the impression that I would be signing up to a monthly fee - just a one-off.

The eye is focussed on the "continue checkout" button and the information directly above it. The customer is urged to think about shipping options, not VIP membership.

Don't believe it's deceptive? Why not put a giant "VIP a monthly fee" line just above the Continue Checkout button, and see the change in sign-ups.

-----


Generally when I see a list of items I am purchasing, a "continue to checkout" button, and a right sidebar that covers the full height of the checkout area, the right sidebar does not contain additional services that I am purchasing. I would, in fact, expect services that I am purchasing to appear in the same list as the items that I am purchasing! In this instance I looked at the right sidebar only because I was looking for the "obvious" indication of the subscription, and even then I had trouble finding the bit that told me that purchasing a single pair of boots would cause me to be signed up, because it is in a sub-header in one of the lowest-contrast parts of the sidebar.

-----


So 800k out of 1m (according to your numbers) manage to avoid the subscription fee.

Remaining users: 200K * $39 / month in revenue.

So $8 million / month of recurring revenue through this programme. I wonder how the margin on that compares to the rest of the business ;)

-----


    JustFab "generate about $100 million this year" in sales
funny that 8 * 12 = 96 which is close enough.

-----


Wow...

-----


I tried out the site, and shopped for shoes as if I were a girl looking for shoes. With the way the shop and the navigation is set up, it really feels like an online store. It's not until you get to the checkout that you're presented with the VIP pricing.

Most of my time spent clicking around was looking at shoes and bags, and then taking a personalized style quiz. It's not at all obvious that it's a subscription based site, unless you carefully read the sidebar during checkout, and the "how it works tab". Not only that, the "how it works" tab disappears after you log in, so you'd never see it again, once you take the personalized quiz and sign up for the service.

Most web users are pretty single-minded in what they want to do, and they don't read. And the site just navigates and feels like a shopping site. Not a subscription site.

I can see how the OP's girlfriend got mislead. As for jdh defending it--well, either you've just looked at the numbers and not tried the actual shopping experience through new eyes, or you're just being completely disingenuous.

-----


Not to pile on, but after looking at that screenshot, I thought your point was going to be that the VIP program was NOT necessary for buying. I had to go back and forth between your comment and the screenshot to figure out the VIP membership was automatically included instead of being an upsell.

Wow. Absolutely appalling. You really should be ashamed of yourself as should anyone working for Justfab.

-----


You are funding one of the oldest scams in the book. This has been done for ages in various forms with various products as door-to-door and direct phone marketing. Currently where I live they are doing it with socks and underwear. You are lured in with "too good to be true" type deal, and hustled to sign into a continuous contract that is hard to get out of. I'm not sure about the current legal status, but I wouldn't be surprised if this business practice wasn't outlawed around here soon since it's been in the news quite a regularly.

-----


"if we assume the investors in this business do perform due diligence, is there another possible explanation? "

Wrong. Investors decided that they can make money with a business with an obvious predatory business model. It might be good money - at least in the short run, in the long run you run out of stupid people as I have seen with other types of such businesses - yet it is a company with a terrible business model.

Yes, I have looked at the picture you provided.

Shame on you.

-----


> We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company.

I don't think anyone is pleased to know that you believe this is to a scam company.

> I just went to the site -- you can do this -- picked a random pair of boots and put them in my shopping cart. I then clicked checkout, and here is what that page looked like:

> http://imagesup.net/?di=15138026329215

Yup, that's misleading.

> Seems pretty clear to me. You can get the boots for $39 if you join the VIP program. "With this purchase, you will be activating your VIP membership"

Yep it's pretty clear to me, there's a pair of boots in the shopping cart and you can continue to checkout.

> It's in plain English, and in the same font size as everything else on the page.

Fontsize schmontize. The checkout button is bigger.

The "checkout with no monthly fee" not-really-a-button is both smaller and misleadingly labeled.

It's also in muted colours, and it is very purposefully placed AFTER the big bright pink checkout button.

In the sidebar, where you normally place information that leads away from the current task (reviews, 'recommended items', advertisements, etc).

YOU are being very dishonest if you claim the above is not purposefully misleading.

Is there ANY reason why these terms are not in between the shopping cart and the checkout button? Any reason except tricking people into missing this rather important bit of info?

Because all other websites that actually want you to read those terms do so. They even make you check a checkbox to pull your attention to it.

You know why other websites do that (oh yes you do), it's because they don't want to trick their customers.

The fact that you're defending this and feigning ignorance makes you quite scummy as well.

-----


Put it this way, from the evidence I've seen, and the checkout screen that is attached further down, This website is illegal in the UK

The Office of fair trading would shut this site in a heart beat. (if it were based in the UK)

the checkout proccess is deliberately misleading, it implies that clicking checkout will by the shoes and nothing else.

-----


> The Office of fair trading would shut this site in a heart beat. (if it were based in the UK)

They have a UK site: http://www.justfab.co.uk/

-----


They have a Spanish site, too, and it's exactly the same as the US version - the same scam.

-----


I don't think you've ever tried dealing with the OFT.

Glacial would imply an excess of speed and action on their part.

Scam companies regularly set up, flout the legislation and the OFT 'guidelines' (which is what they are so a breach needs to be investigated before it can become subject to enforcement - more delay) and keep going until the OFT eventually acts then collapse to run off with the money.

Normally local trading standards units are much quicker at taking action but have limited powers and some things are reserved for OFT (see Glacial, above).

It has taken years of complaints to the OFT about mobile phone companies hiking 'fixed price' contracts mid-term for any investigation to be done (small print says 'fixed price' is index linked to whatever index they choose to apply an increase with). The investigation is still ongoing and although there is talk of action, it's not actualy happened yet, despite this being one of the most significant causes of complaints about mobile phone contracts for many years. [http://www.bbc.co.uk/programmes/b006mg74/features/mobile-con...]

Action on a scam site doing auto-subscribe ? I wouldn't hold my breath regardless of whether it is legal or not.

-----


I started reading your post thinking you sounded level headed and that I'd hear you out.

I checked the link. Nope, you are scum. This is theft. Shame on you.

-----


Same here. In fact, when I read the OP, I thought it was a little emotional and perhaps all a misunderstanding. I then read the investor's reasonable-sounding response, which lent more credence to that notion.

Then, checked the screenshot and there was no question. Pure scam.

-----


Bollocks. Even knowing there was content on the page informing me of the VIP membership it took me a minute to indentify. It's a wall of text to process, on the RHS, in text considerably smaller than the big pink checkout button which focuses the attention.

This page is absolutely designed to catch people unawares. You long term subscribers becuase people a) don't realise theya re being repeat charged, b) they don't know how to cancel.

The business model is based on tricking people. As a VC you are not stupid, you know how this business works. To pretend otherwise is just a lie.

-----


Sounds like you have a simple solution:

Offer complete refunds of all paid subscription fees to anybody who asks for one. No questions asked. Single button, right from your "My Account" page. Refund all 8 months of those charges in one shot.

If you're correct, and it's just a tiny fraction of a percent of your userbase who neglected to read that six paragraph sidebar disguised as an ignorable upsell ad, then chances are nobody will ever ask for this refund and you guys will all be good to go. You can even offer it only to people who have never bought a second item, thus limiting it only to those few silly folks who put themselves in this boat through their own foolishness.

No harm right, since as you say, your guys are on the up and up.

-----


Given that you've taken the time to explain all of this to the HN community, I can't help but wonder why you don't encourage JustFab to use this as a good PR opportunity. If, as you claim, the majority of users are happy the subscription-based model, surely the best way to nip this in the bud is to simply refund the money to the OP's girlfriend.

The only reason why I would think that you don't want to extend that olive branch is because you are afraid that it will set a precedence for other JustFab users, and that JustFab will be engulfed with refund requests. This however flies in the face of your firm believe that the majority of JustFab users are extremely happy with the services provided.

So, in a nutshell, instead of disputing whether or not the VIP subscription requirement is "scammy" or not, I would think that you would advocate the shortest route to conclusion in this case: refund the money.

In my eyes, anything less is simply vindication of the concerns outlined in this discussion thread.

-----


The rule in my book is pretty simple: opt-in is perfectly fine, opt-out is shady at best, and morally wrong. This applies to every service and/or subscription, from mailing lists to purchases.

This case is a clear "opt-out" case. If their offer is good enough, they could just explain why properly and people would opt-in. If they need to resort to this kind of tricks to get people enrolled, their offer is not so good and they are feeding on tricking the customers.

In any case, you should never trust a business resorting to these practices. These people won't have a problem selling your personal data whenever they (legally) have the opportunity, or doing anything even when its harmful for you (so long as it's legal). The parentheses are the differentiating point between "shady" and "scam" businesses.

This doesn't necessarily mean that you shouldn't buy from them occasionally (hello ryanair), but you should take every measure at your hand to avoid it and/or protect yourself from them. This includes using throwaway email addresses, refillable debit cards, etc.

If I happened to be an investor in that company, I would first push for good practices before it's too late. If that fails, I would do anything possible to get my money out of there. Apparently you and others like you do not think the same way, so "shady" business practices won't die. I just hope that your grandma doesn't ever get tricked into losing much because of that, or you will feel really really bad that day.

-----


So you consider Netflix to be a shady and immoral business?

-----


Netflix makes it pretty obvious that you're signing up for a monthly subscription. It is also a pretty well-known fact about their business model so it's much harder to be "duped" into it.

-----


If Netflix let you add individual movies to a cart and had a "rent this now" button that actually signed you up, that'd be a great comparison.

-----


Oh, come on. The page shown in that image is totally designed to obfuscate the subscription info. I was looking for it and it still took me a minute or two to figure out where it was.

-----


While it might seem pretty clear to you, it isn't clear to most users. There is very little indication that you are getting the boots for $39.95 as a VIP member. In addition there is a SINGLE large action item; "continue checkout." There is a WALL of text to the right, with no real indication you need to read it (the whole "same font size") In addition there is an action item "No thanks" which doesn't even look like something that is actionable. You claim that it is in plain English, but it actually isn't. The plain English says "Continue Checkout." Not "Continue Checkout as a new VIP member" There is an indication you are activating your VIP membership. But this wording is placed as far from the "continue checkout" button as possible. There was a recent article on HN about Dark Patterns http://darkpatterns.org/ and this page uses some of those dark patterns.

-----


You've just demonstrated exactly what a classic scam looks like online.

"It's in plain English" doesn't compensate for the fact that it's a small print sidebar and everything else looks and feels exactly like a regular shop.

Tricking people into getting a subscription via the small print is one of the oldest dubious business models around. Companies like JustFab disgust me.

I will make an effort to avoid you and Matrix Partners. I don't want to be near investors that justify such unethical tactics.

Yes, I'm sure you've done plenty of due diligence. You just lack ethics.

-----


I looked at the image you provided.

This is fraud, pure and simple - if this is somehow legal and within USA consumer rights laws, then it's not a sign that the company is right, it's a sign that the consumer rights laws there are broken and need to be changed.

-----


Wait a minute, if they are leeching so much money (even if some are supposed 'credit for future') from (mostly) unsuspecting Customers - WHY did they need so many millions from Investors also, in series B and series C also?

Also - Aren't you worried that Credit Card processors (Visa, MC, Amex) will decide to just Cut Them Off permanently, due to excessive complaints? That has happened before to other "legit" recurring payments establishments. This is especially true if they Charge for "future" products, that is collect fee and don't Ship any product.

-----


The mere fact that the costs for VIP membership are not listed in the same box as the other prices you pay sets off my internal fraud detector.

If you really don't want them to look like scammers, make sure they include the monthly price right there.

-----


As someone who does some UX that page is clearly designed to mislead. I would expect the majority of users' eyes to skim over that right hand column, interpret it s an invitation to sign up for a VIP program they aren't interested in and hit the Checkout button.

It's well designed for your purposes. Appallingly designed if you actually want someone to notice that they are signing up for an ongoing bill.

Still, I learned something useful about Matrix Partners today.

-----


Why am I not surprised that the Series A VC is with Matrix? They seem to go out of their way to earn a bad reputation:

http://www.boston.com/business/technology/innoeco/2009/11/th...

(Far more details on TheFunded for those who are members.)

-----


from your HN profile

> founder of Betfair (UK based, IPO) and eHow

"betfair" is an oxymoron, a fair betting company is a betting company that does not stay in business long

"eHow" is the pioneer of the "content farm" business

"justfab" fits quite nice into this portfolio

-----


Did his reference to Betfair and eHow just disappear?

-----


still there: https://news.ycombinator.com/user?id=jdh

screenshot: http://www.dropmocks.com/mBw5GS

-----


You want to know how to make it crystal-clear what the buyer is opting-into? Add the VIP membership as a line-item in their cart with an explanation of what it is underneath that item.

I bet they'll never ever do that.

-----


This is their previous checkout page:

https://news.ycombinator.com/item?id=4592827

-----


The previous one seems less deceptive - it makes the user check a box that mentions the VIP program.

-----


Thank you for this.

I was going to say OP's (your) girlfriend went through this 8 months ago, which probably meant a completely different looking checkout page. We all know startups are constantly trying different things in their UI to increase conversion.

-----


Thanks. For me - they are and were good enough. In particular you can get your shoes for past credits. This is far from scam.

-----


> In particular you can get your shoes for past credits.

Still a scam. OP's girlfriend (and probably many others) didn't know about this deal and didn't (knowingly) consent to it.

-----


> We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company.

I'm sorry, but the second half of your sentence does not follow from the first.

Your due diligence as an investor in no way reassures users that they are not being scammed. For instance the very "dark patterns" that Justfab seems to be relying on (https://news.ycombinator.com/item?id=6455927) might look great to you as an investor focused on increasing revenue and profits, but are designed to trick users.

That said, kudos for jumping in to defend your investee!

-----


jdh's user page here on Hacker News says "VC at Matrix Partners. 10 year entrepreneur -- founder of Betfair (UK based, IPO) and eHow." That appears to be Josh Hannah: http://www.matrixpartners.com/team/josh-hannah/

Due diligence cuts both ways. If you're looking to raise money for a startup, research the VCs you are talking to. Consider their other investments and the way they conduct business.

-----


You're being disingenuous. I don't think it was at all obvious, and it took me at least 10 seconds to fully realize where these extra charges were described, and that's only because I knew it was there somewhere. It took another 5 seconds to find the link to the place where you can buy it as a "regular" member.

This is automatic and opt-in, and non-obvious opt-out recurring membership fee. It's scummy and the default should be to purchase as a normal member, then try to genuinely upsell me in the sidebar. It's the equivalent of being automatically enrolled in amazon prime when I go to buy anything from amazon, and having to click a tiny link to the right that says "don't enroll me in amazon prime, just let me buy this" if I don't want amazon prime.

The entire shopping cart is an example of a dark pattern. http://darkpatterns.org/ and I personally wouldn't use a site whose entire business model clearly hinges on tricking or ensnaring its customers.

-----


I'm happy you're an investor and I hope you get everything you deserve.

-----


| http://imagesup.net/?di=15138026329215

"Continue Checkout" surely is not the same as "Continue Signup" and definitely not the same as "Become a member of our VIP club for 39$/m".

A sustainable business model wouldn't need to trick people into this. It would broadly (not in small print as it's done right now) advertise the benefits of the VIP program and convince people to sign up.

-----


People scan web pages - they don't read them. Especially in a typical scenario like this, you just check that you've ordered what you thought and look at the price and move on the the wizard.

I looked at the picture you linked to, and even when I knew what I was looking for, I spent at least 5 seconds before I noticed the VIP membership. 5 seconds is more than I'll use on a step like this when purchasing something.

In my mind this is a scam and I will not recommend anyone to use this site. Don't get me wrong - I like the business idea in general, but there should be an option during checkout where you have to actively choose if you want to be a member or not. Anything which cost you money (especially recurring fees) should always require an active action from the customer!

-----


If purchase entails buying into "VIP membership", why doesn't that show up in the shopping cart, where people are actually looking?

If purchase commits the buyer to additional monthly payments, albeit under some conditions, why isn't the user alerted to this in the shopping cart, where they are looking?

At what point does a UI disaster become a scam? As an uninvolved observer, somewhere around here I'd have thought.

-----


Mr. VC, great explanation. You blame it on the purchaser for the poor usability & cheap business manipulation. Customer buys a shoe, you added a VIP membership by default & you wanted customer to remove that before checkout.

Why can't you just have a intermediate page saying "Save 50% by subscribing to VIP membership at $39 / month" with all the explanation & have "Yes, subscribe me as a VIP member" & "No Thanks" instead of adding that by default ? JustFab won't do that because they know conversion will be much lower.

In every site I have purchased, I have never seen this experience. So how do you want me as a user to SUSPECT a monthly recurring charge like this ?

-----


jdh - is this a scam? http://i.imgur.com/s9bsLzK.png

-----


Ok, it's not illegal as I look at it. But it still feels like shady business. People tend to focus on the checkout button and don't realy see the VIP-announcement because it looks like a kind of advertisment. People are therefore (at least in my opinion) tricked into a subscription. It's not a way of doing business I like.

-----


If they're being so clear why are they exploiting advertizing blindness to inform their customers of the recurring charges.

Why isn't there an entry after the "TOTAL" informing you of the subscription charges.

They do count as charges and should be shown in a statement listing all charges.

-----


> http://imagesup.net/?di=15138026329215

This is definitely sleazy. The monthly payment is not mentioned anywhere near the pricing info. The page is designed to look like you make a one time payment, and only at the very bottom of the sidebar (and you know very well that sidebars never get read) does it mention that they're charging you every month.

It is obvious that many people will miss this. The creators of this site intentionally mislead their customers.

-----


How can you compare this company with Netflix? Netflix is advertised as a subscription service, and there are no hidden charges.

Your company's business model is based almost entirely by hiding charges.

The fact that you successfully tricked a million people does not make it Okay.

-----


@jdh - how long it will take you to realize, that the biggest scam they pulled off were those financing rounds? EDIT: Just noticed that you were a round A investor. Good for you then.

-----


> I just went to the site -- you can do this -- picked a random pair of boots and put them in my shopping cart. I then clicked checkout, and here is what that page looked like:

> (http://imagesup.net/?di=15138026329215)

> "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" -- Seriously, please look at the link above to the checkout flow and tell me that's how you see it, that you have to read the 2,500 word TOS to figure out that this is the case.

That screenshot looks pretty bad to me. I'd expect recurring charges to appear in the same bright pink colour, and in the same "sub total, total continue checkout" box, as the other charges.

-----


$100MM+, you should at least expect a proof read page? "with this purchase your are activating your VIP Membership"

(I am just going by the text on the image you have supplied)

-----


I hope you, as an investor in this company, are also held (at least financially) liable for this scam.

Unfortunately, you're likely to greatly benefit from scamming so many people.

-----


I usually dont comment on HN but just came to say you're full of shit. Thats a classic dark pattern on tricking customers into things that they didn't want in first place.

-----


Thanks for being upfront about your affiliation with a shady business practice, this way startup founders can skip you right away when they look for credible investors.

-----


Or, scam type start up founders know where to get investment from.

-----


> More than half of the people who subscribe to the service are still subscribers after two years

In the context of the original poster's story, this reply only reinforces the idea that JustFab is scamming many many thousands of people and not just the odd person here and there.

-----


JustFab is a trash company and you're a trash investor. They won't last and you won't last.

-----


If I went to your site, I would see all of that text, choose NOT to read it and then choose NOT to purchase the shoes. Because I would recognize that there was something hinky and I would not want to expend the mental energy to figure out what it is. And I would NOT return to you site or recommend it to anyone else.

I buy running shoes from an online retailer that also provides a VIP membership. And it can be clearly understood in 5-10 seconds. And you have to opt-IN to the membership and opt_IN to auto-renewal of the charge. And guess what?? It's 1.99 per YEAR - clearly not a great source of income to the company. And my discount is considerably more than 1.99. (I guess they just don't want me to check out as a guest.)

-----


Are you kidding me? I don't even see a price for the subscription fee anywhere on that page. When you buy something, you expect to see a price when you checkout your shopping cart. Do you buy groceries and pay for things that don't show up on the register too?

People are conditioned to get enrolled in things like loyalty/rewards clubs that give points for purchases. No big deal. That's what this looks like if you happen to notice the block in the upper right corner. Most people ignore what's in that area anyways. You're full of shit.

You should lose your job for being unable to find a better investment for your clients' funds than a scam website.

-----


I was with you right up until i looked at the screenshot. It looks like it has been very carefully laid out and A/B tested to optimize for the maximum number of signups, not for making sure users know what they're signing up for.

-----


A prime example of a scam, that you can get away with in court because just like fine print in contracts, it was actually stated.

See, there is the action (the orange checkout button) on the left box. Right below it are the shipping options. And then there's the VIP sidebar. It's "action" isn't in any discernable way a "button", it's a small red link. It's designed to be non recognizable as an "action" that is an alternative to the big orange action, and unless you actually read the sidebar, you won't know that the sidebar is also a checkout option display. Sidebars, for the most part, are not known to consumers to contain relevant information, because everybody stuffs sidebars with advertising.

-----


It seems that you invested in a scam. Hopefully they will be out of business soon.

-----


Here's the biggest issue with this checkout page... there is a Continue Checkout button at the top right... about as far away from the checkout and membership details as you could put it and very likely to be one of the first things seen. This is VERY intentional misdirection to induce quick checkouts before people read the details. I don't see how this isn't obvious.

-----


Josh, this is a bunch of malarky. You should be ashamed of yourself.

-----


If what you say is true, Justfab isn't a scam company, and most of the customers know about the monthly fee, they should have no problems making the fee explicitly clear on the checkout page.

Why hide it like you are doing so now? In the sidebar, where ads are usually placed (and ignored), and in non-emphasized font.

-----


Thanks for jumping in. It's great to get 'the other side'.

That said, where I checking out, my eye gravitates toward that big red 'Continue Checkout' button, not the fact that I'm signing up for $479.40 a year. A more blunt but upfront UX would hit them with interstitials.

-----


You sound like the Ebay scammer that got pwned by Judge Judy on national TV who just kept saying "it's not my fault she couldn't read."

http://www.youtube.com/watch?v=W5i_m9k7Wos

-----


On your example, the most obvious buttons are bright pink saying 'Continue Checkout' with the VIP Membership program in a separate set of boxes on the side. They are definitely not presented as part of the workflow of the checkout process for a consumer.

'With this purchase you are activating your VIP membership' is smaller and in black. Incredibly easily overlooked.

It is possible that the JustFab UI designers aren't very good and have made a terrible mistake but the overall look and feel of the rest of the site would suggest that they have put a LOT of thought into steering their prospective customers down a very clear route to purchase and know EXACTLY what they are trying to do here.

-----


What a mother fucker. Go to hell.

EDIT: haha founder of betfair and eHow. Delicious.

-----


Not sorry to contradict but this is usual trickery used by scammers. This page and checkout flow are obviously designed around making people not understand they're subscribing to a recurring premium fee. I have a hard time believing you, as a VC, are unable to recognize this as this usually means a high short term ROI.

If it weren't trickery you'd have two same size button next to each other, one saying "VIP checkout" and the other "regular checkout " but this would significantly reduce the number of subscriptions.

-----


" More than half of the people who subscribe to the service are still subscribers after two years, which is unusually high for a subscription service."

In other words, nearly half of the people who get tricked into subscribing cancel?

Let's also not forget that this will typically be on a credit card - many consumers do not examine their statements closely and will just continue forking over minimum payment. (Of course we won't forget it - it's part of the business model, after all.)

-----


> Under "How VIP Membership Works", it explains: " If you do not take action between the 1st and the 5th of the month, you will be charged $39.95 for a member credit on the 6th. Each credit can be redeemed for 1 JustFab item, so use it to shop later!"

How much does the service cost that takes action automatically for you between the 1st and the 5th? Isn't this what computers are for to do things automatically for you?

-----


LOl that screenshot proves beyond a doubt that they are a scam company. What the hell are you guys thinking? Those bastards should be in jail in my country.

-----


I think trying to defend this scam was a really bad idea.

-----


I think it is interesting to see how an investors in such activities tried to justify themselves.

-----


It's put in the bottom right corner, where if someone isn't parsing the whole page will be pretty sure to miss it. Most people scan pages http://www.nngroup.com/articles/f-shaped-pattern-reading-web... and it's conveniently places where people tend to skim or skip.

-----


Now I know I never need to go for Matrix Partners for anything, knowing they have people like this person working there.

-----


I looked at your image, and I think it's really unfortunate that they aren't upfront about what's going on.

You have to read all the way through to the last sentence at the bottom of the page, and then think back through what you've already read to piece together what you're signing up for.

They could have just said, "If you join our VIP program, you get to order one item from each month's showcase at no charge, for a $39.95 monthly membership fee. If you don't see anything in the showcase that you like, you have until the 5th of the month to opt out and we'll waive the fee for that month."

So yeah, it's not as bad as what the OP said, but it's still pretty bad.

Speculation: Women join the site based on word-of-mouth from other women, who tell them how it works. So that's why they aren't fooled. Women who aren't told beforehand how it works are probably like "WTF?" when they see it and are turned off by it, and some % of those are just going to click through, trusting that whatever that promotion is, surely this company is trustworthy and not trying to rip them off.

-----


There's no nicer way to say this: you're scum. Have fun trying to sleep at night.

-----


What a load of bullshit, this page is clearly designed to trick people into a subscription.

-----


No, it looks excatly like a scam.

-----


How is this any different than the Nigerian scam emails? It seems pretty clear that Nigerian scam emails are in fact a scam, so anyone "falling" for them are just agreeing to be scammed, just like JustFab.

-----


I think you know what you're saying here is wrong and that JustFab is intentionally misleading.

However, one must admire how committed you are as an investor to go down hard with this sinking ship.

-----


So, Mr. Investor, you believe that this is normal, acceptable business practice, and you can't imagine why anybody would put a stop to these guys.

And I bet you wonder why VCs get a bad name!

-----


Is the NPS measured with visitors to the site, customers on site, or people being charged? I'd wager for some companies the differences could be telling.

-----


This comment is a perfect example of how people who are involved in evil business practices justify it to themselves.

-----


Instead of defending the indefensible, you should go to your next board meeting and tell the CEO s/he has to change this.

-----


> I just went to the site -- you can do this -- picked a random pair of boots and put them in my shopping cart. I then clicked checkout, and here is what that page looked like:

http://imagesup.net/?di=15138026329215

You must realise that people are just going to follow their eye down the screen to the checkout button and assume that it's going to work like every other site. Putting something off to the side in the same font as everything else is what's misleading - it's likely that some significant number of people are going to click through without realising what they're signing up for. If there were a confirmation screen that just said 'Hey, this is a subscription!' Or something like that, then it would be less shady. As is it seems dishonest to claim that it was 'clear'.

-----


Here's your screenshot, with the bottom part cut off. The part below the shopping cart. This is important, because the shopping cart is also the Order Summary.

http://i.imgur.com/dmxIwHr.png

So, it's obvious that the intent is to hide the fact that membership is $39.95 a month. The goal is to trick the person into getting the membership. I guarantee that's intentional.

Porn sites don't even go this far.

Edit: I should also note that you are fabricating a story here.

"By asking members to commit to come back to the site once a month..."

You aren't asking. You are including the person automatically, and requiring them to opt-out. And you are keeping that as hidden as possible by including this important information "in the same font size as everything else on the page."

-----


This is bait and switch. You liken it to h&m or Zara - but they offer continuity services - they do not trick their customers. I may let them know (as I know C-levels at each) that you are attempting to trade off their good names. I am surprised you have not yet been fined under the distance selling regulations.

You can self-justify all you want, but you just smelt green and wanted in on the dodgy action.

Can you say "Columbia house record club?"

You exploit people. Be ashamed.

Edit: I see from your profile you founded betfair. This all makes rather more sense, given the cloud that has perpetually hovered around that business, due to them, y'know, not paying out when people win "too much". Also repeatedly fined by the Advertising Standards Agency, IIRC.

You like your dodgy businesses. It's your call as to what you do, but a business that provides mutual benefit, rather than being parasitic, will survive in the long term. If you bleed your customers dry and rip them off, they will go elsewhere. You talk about retention, but you are not retaining - you are duping and imprisoning. I dare say you do not care, however, so long as the money keeps rolling in, and will simply move onto the next scam when this one gets too hot.

-----


Every single person who has been misled into signing up for a recurring charge should do this one thing:

Dispute the charge with their credit card company.

You'll get your money back and it will issue a bunch of chargebacks to JustFab, which will penalize them financially. If enough people complain their penalties will escalate and their credit card processing rates will go through the roof. This is how the credit card system weeds out crappy businesses like this.

Unfortunately the very people who this model is designed to exploit are the least likely to know about their consumer protections.

-----


You can also file an action against them in your local small claims court. Depending on where you live, it takes about 30 minutes to fill out the form and costs around $25 in filing fees. Most likely the company will not respond to your complaint, and you will receive a judgment for all of the money you paid them. Assuming they don't go bankrupt, they will eventually pay you and satisfy the judgment. I did this against similar scams like Video Professor in the early Facebook era and it worked surprisingly well for 2 years worth of scam rebills to which I had been completely oblivious.

-----


>> Assuming they don't go bankrupt, they will eventually pay you and satisfy the judgment.

Let's be honest, though. It's 80% certain that they're going to go bankrupt. They're clearly not building a company to last. Your best hope would be to get your money back before bankrupcy proceedings start.

-----


Why? A chargeback is basically an automation of that process, with the full backing of your credit card company.

-----


If corporations are going to run the system, you might as well get some benefit from having a large one go to bat for you when you can.

-----


Totally not the case that you get your money back, at least with WellsFargo Visa, they will investigate to determine whether your card was used by some other party.

Saying, "I didn't read the terms of the agreement" is not grounds for a chargeback.

What's worse is when you've signed up for a One year recurring payment and you have to jump through hoops to cancel such as a registered letter to cancel.

Wells fargo will refuse to cancel for you, saying it is between you and the vendor. Further to that, you can't even cancel your credit card, as Wells Fargo will transfer the recurring charge to a new card.

About the only way I could figure out how to get out of that type of recurring scam is to just cancel my bank account.

-----


Wells fargo will refuse to cancel for you, saying it is between you and the vendor. Further to that, you can't even cancel your credit card, as Wells Fargo will transfer the recurring charge to a new card.

That's not been my experience with AmEx. Some scammy company began billing me for monthly charges, and I couldn't get anywhere through the telephone number listed on the bill. I called AmEx, disputed the charges, and got all the money back—but the company kept charging me every month anyway! AmEx said they'd put a block on the company, and since then I've been fine.

-----


AmEx has a unique "no questions asked" chargeback policy. That's why people use AmEx cards despite that their interchange fees are higher, they aren't accepted everywhere, and they're harder to qualify for.

-----


I can't speak for Wells Fargo, but I've had zero problems issuing charge backs with Chase Signature. I generally file a claim on their ridiculously unpleasant web form and I get temporarily reimbursed immediately while they investigate the issue.

-----


Yes - that's the way it works with Wellsfargo. You are not required to pay the charge until they've completed their investigation. But, as long as the vendor has evidence that you submitted the card number, and that the vendor documented the recurring charge, and you agreed to the charge - you are responsible for the charges on your card.

-----


That's why you should use a credit card and not a debit card for online purchases. If you dispute the charge, it's their money instead of yours that they're recovering.

-----


Precisely. But I'm thinking that the OP's GF, being a foreigner, probably did not have an American CC (no credit history etcetc), so for people like her, there is just no choice....

-----


And that's why you shouldn't bank at Wells Fargo.

-----


WF is fine, its just that parent thought his WF Visa was the same thing as an actual Visa that comes with actual protection

Remember, never use debit cards.

-----


A locally based credit union will provide better and more flexible support than any big chain bank. Plus you get to use any credit union ATM anywhere (there's a CO-OP network ATM in every 7-11) for free, and most refund some amount of ATM fees every month.

-----


But a Credit Union debit card has just the same weaknesses as a Wells Fargo one.

-----


I can confirm that Bank of America is great about this on the debit side (though I have started using a credit card for online purchases). BoA gave me my money back instantly, stopped charges from the vendor and went off to investigate.

-----


How can WellsFargo transfer a recurring charge to a new credit card? That makes no sense. How can they associate old card with new card? That means if there was fraud going on WellsFargo would have no way of stopping it ever.

It also sounds like you are talking about a debit card, and not a credit card, and it sounds like you gave a scammer your bank account number, not debit card number. Those are just guesses.

-----


There's a service available called Account Updater that provides merchants with updated credit card numbers. It's intended to be a convenience for both merchants and consumers.

http://usa.visa.com/merchants/products-services/processing-s...

-----


Chase is also being a hard ass about charge backs these days...

-----


Except for there is a time window for these sorts of things.

His girlfriend isn't going to be able to dispute charges that are 8-months old.

-----


The window is usually 180 days, and some of the more lenient credit card companies will go back even further depending on the circumstances. She can easily get back 6 of the 8 monthly charges.

A simple way to avoid issues like this is to always generate a virtual card for each purchase, and then turn the virtual card off the moment the transaction is completed. You can do this through Netspend prepaid cards - you just open their site in another tab, generate a card with two clicks and turn it off with another two clicks. It costs nothing and the whole process adds about 1 minute to your purchase. I do this for every "free" trial I take on - if I like the service, then I will consciously make the decision to change the billing to a real card. No one gets to make that decision for me.

-----


That's a lot of work to buy a pair of shoes. Not to mention, I never heard of Netspend (until now). And I spend most of my day on the net. You expect folks who don't to know?

It shouldn't be this way. Buyer beware is one thing. But one shouldn't have to watch their back to buy a pair of shoes.

What this company is doing is low down.

By the way, thanks for the tip. I'm looking at Netspend right now.

-----


Bank Of America has SafeShop for their cards.

https://www.bankofamerica.com/privacy/accounts-cards/shopsaf...

-----


Discover card has something similar also:

https://www.discover.com/credit-cards/member-benefits/securi...

-----


Virtual card number? Never heard of this before. Sounds useful. Is this something unique to Netspend? Can you do it via Paypal or something if you're outside the US? I wouldnt need a physical card if I can link such functionality to my (verified) Paypal account.

-----


I think PayPal used to do it through a browser toolbar they had, but disbanded the service for some reason. I'm not sure if they've replaced that functionality in some other product. With Netspend, you get one of their physical cards, but you also get a login for their site where you can create as many virtual cards as you want. The virtual cards use the balance from the main card, and you can shut off each virtual card whenever you feel like it.

-----


Many (not all) credit card vendors offer virtual account numbers.

-----


PayPal does it too. The screens to create the cards are just hard to get to.

-----


My bank provides a virtual card service, and I use it for basically everything. I would be hesitant to make purchasing from smaller or new online stores without it.

-----


Then also file a complaint with the attorney general of a state in the US and the Better Business Bureau. Also write an honest Yelp review (make it fair and truthful but not slanted as you don't want to be sued over libel). All of those things matter a lot to businesses, in addition to their standing with credit card companies and banks.

-----


The BBB are close to a scam themselves, but it might be worth contacting the FTC - they tend to show an interest in this kind of thing and can lay down some serious financial hurt themselves.

-----


Those won't matter to scam business, especially since the BBB itself is a scam, and most yelp reviews are fake.

-----


Although I think the BBB is not a scam, there are still many other routes to take. There's always a potential for a class-action law suit. Some law firms specialize in that and work cases only taking money from any final winnings in court.

And the attorneys general are usually happy to hear any complaints. While there's often not immediate results or consequences, having made an official complaint helps those who are seeking to apply some rule of law via the justice system.

-----


The BBB sells its A ratings.

http://www.youtube.com/watch?v=Yo8kfV9kONw

Watch the video.

-----


The BBB is the very definition of the word scam. More specifically, extortion.

-----


It may be possible.. I've gotten refunds going back that far. But definitely the more recent months will get refunded. And that's enough to put some financial hurt on JustFab, as there are additional penalties they pay with each chargeback.

-----


Well, in my country the credit card company's police on time window isn't very relevant. If there is a scam involved, it becomes a legal matter and for that the time window is years.

-----


For most cases, 8 months are out of scope, but his girlfriend should be able to successfully dispute the last 3-6 month bills anyway.

In some places, like EU direct debit legislation, the maximum time window for such disputes is 12 months after you receive that invoice/bill, so ~13 months in effect.

-----


That is the time window for chargebacks, but not for small claims court.

-----


Dispute the charge with their credit card company.

Who is their credit card company?

I have not had a credit card complaint for years but I would probably ask my credit card issuer for a refund, in particular because I have an agreement with my credit card issuer but not with the vendor's credit card company.

-----


Yes, that's what the parent says.

When Bob has a problem with Ann's scummy business Bob should ask Bob's credit card company for a refund, which generates chargebacks for Ann's business.

-----


For me, not having to deal with a vendor (or even its credit card company) is a major advantage of using a credit card instead – for example – paying by invoice.

I have just checked my credit card issuer's process for such cases, it seems pretty straight forward.

The down vote of my comment indicates a possible difference in other parts of the world …

-----


JustFab is not a 'scam company' (in the sense that they may not be doing anything technically illegal), but they are using DARK DESIGN PATTERNS[1] to trick at least some people into doing things they don't want to do.

The checkout page[2], in particular, seems designed specifically to trick people into signing up for recurring monthly charges. Any person who adds merchandise to the cart and then clicks the big 'Continue Checkout' button -- without stopping to read all the surrounding text -- will unintentionally sign up for the $39.95/month "VIP" plan.

My mom, who is trusting by nature, would never stop to read all that surrounding text, because she has been conditioned by years of online ordering to add items to a cart and then find and click the big checkout button. She would be tricked into signing up for recurring charges.

--

[1] See http://darkpatterns.org/

[2] http://imagesup.net/?di=15138026329215 -- this was posted by one of the company's investors elsewhere on this thread. It's a canonical example of a dark design pattern.

-----


No, seriously, if your business model is based on tricking people into paying for something they don’t want and didn’t realize they’re getting charged for (no meeting of the minds), your company is a scam company. It’s simple as that.

-----


Agreed. This was a standard practice in adult and it got so out of hand, people signing up for a $2 day trial but their credit cards were getting banged for hundreds of dollars because they didn't scroll down past a whole windows worth of blank space to uncheck that "Sign me up for full memberships to these 3525 other sites too for $39.95/mo" pre-checked cross-sale, causing Visa and Master Card to actually step in and take action.

It's straight up scam-tactics.

-----


exactly, a business model that tricks customers is not a business model, it is a scam and fraudulent

-----


It really depends upon the percentages. From my experiences pretty much any website will trick someone, regardless of your intentions otherwise.

Despite having to: choose a price, click a "I agree to be charged $<dollar amount> every month" checkbox, and enter their credit card information, a subscription-based website I used to run still got emails from people complaining, saying that they didn't want us to charge them yet.

-----


It depends more on intent than percentages. If you set out to mislead and only a few people fall for it, then it is still a scam, albeit not a very effective one.

On the other hand, if your intentions are honest, but a ton of people are confused, then it is not a scam. It is just poor execution. Of course, if you become aware of this but do nothing to address it, then your intent becomes questionable.

-----


JustFab is not a scam company...but they are using DARK DESIGN PATTERNS

So...they are a scam company? Just because you can try to apply different terms to describe their business, doesn't mean they aren't operating mainly to scam people out of their money.

-----


Let's not whitewash it though. That's a scam.

-----


Nah, it is a scam company as this type of activity is considered fraudulent in any sane country. Please edit your post accordingly.

-----


It seems to me that calling scam behavior a "dark design pattern" just serves to legitimize it.

-----


What they are doing in fact is illegal in most countries with strong consumer protection. Explicit and informed consent is not something judges and regulators take lightly.

And since they apparently operate in Germany, France and Spain, I strongly suspect they are breaking the law in one if not all of those countries.

-----


A law has actually been passed in Germany to curtail these 'subscription services':

https://blog.avast.com/2012/04/17/here-comes-the-zahlungspfl...

-----


Correct, and indeed, this business model is nothing new or unusual in the EU in general, or in Germany in particular. Back in the early, pre-smartphone days of mobile, a lot of European companies made fortunes by selling ringtones through a misleading subscription model similar to JustFab's. Their success soon led to a lot of imitators in the US market.

Remember those "Text 53646 to this number to get your NSync ringtone!!!" ads that used to blanket the airwaves? Texting that number got you your ringtone; it also got you $20/month in recurring fees that you were unaware of, because you were a kid, and kids usually don't read their own bills.

There may be nothing technically "illegal" about this dark pattern in the US, but the pattern is pretty fucking dark. And it's usually self-defeating in the long run. Many of the fly-by-night ringtone peddlers of the early 2000s had to flee one country after the next, always on the hunt for new suckers in new territories, always getting chased out of town by an angry mob of pissed-off customers.

This model is not sustainable. Though it's not a pyramid scheme, it shares a similar need for a fresh supply of new victims at a rate fast enough to make up for churn. Churn starts to reach critical mass at some point, forcing the company to expand into a new country altogether.

Then again, sometimes the model just works. Look at GoDaddy. As far as I can tell, they make a shit-ton of money by making it as hard as humanly possible to break subscriptions and hidden upsells, and sadly, they're still around.

-----


Pre-internet, or at least widespread internet, there was a similar scam with music tapes, perhaps records even before that. The first month's selections would be free but for shipping, after that they would send you a bunch every month if they didn't hear from you — and a hefty bill.

-----


One major difference: JustFab doesn't send you anything, they give you "credits" which can be used for future purchase but most likely got un-noticed and un-used.

-----


So at worst, you'd pay for one item in the first cycle and then cancel.

Also, at least back in the bad old days when I was at various times a "member" of various book clubs, you got sent a bill, the company didn't charge you and enjoy float (interest earned on bank balances) like this company does on their credits.

And those credits will evaporate if/when this company goes out of business.

-----


"Credits" are in some cases more insidious than being sent physical goods, because they're less likely to be noticed. And you'd be surprised how slowly most people realize they've been subscribed to a service -- especially if the billing for that service is under a fairly innocuous-sounding or obscure name (as is often the case).

Paying "for one item in the first cycle and then cancel[ing]" is probably an exceptional case. I'd be willing to bet that it takes most users two, maybe even three or more cycles to notice and then break the subscription.

-----


Yes, it's called "negative-option billing," as practiced by the Book of the Month Club, Columbia Record Club, and others.

-----


buying stamps "on approval" predates all of these

-----


you know who the most successful company was in this "ringtone" bussines? Jamba, who was Jamba? the Samwer Brothers. just saying.

-----


You just perfectly described a scam.

-----


The image you posted is way more informative than this one: http://i.imgur.com/ctMDiCJ.png

Which one is most recent?

Frankly I don't see the difference between a company that tricks people into expensive recurring charges and a scam.

-----


come on, it's a scam, pure and simple

-----


Wait, so actually OP's girlfriend would have had a bunch of credits they could spend on items, right?

-----


This sort of thing is infuriating. Nowhere on this page does it say "we will charge you every month." http://i.imgur.com/ctMDiCJ.png

I just went through the whole checkout process to see how bad it really is. There were upsell interstitials at least four times, they did the 20-minute countdown clock thing to add a little pressure, and the checkout page looked like I was getting boots for $19.95. If you look on the right side in pretty small grey text it says that you're activating your VIP membership. You have to read down several paragraphs to figure out what they're trying to get away with, and nowhere does it actually say in clear terms "we will charge you every month." Entering in your shipping and payment information and it again completely fails to indicate there's a monthly fee — just a little checkbox "I accept the terms..."

All the state attorney generals should join together to sue them and get their victims' money back. At least we know they have the cash to pay the settlement now thanks to RHO, Matrix, and TCV.

-----


Heh, yeah. There's a class action against them filed in 2011, though not being a part of it I haven't heard anything since.

I wonder sometimes if the corporate shield isn't too strong -- that is, if someone (say, Adam Goldenberg or Don Ressler, the co-CEOs (that always goes well) of Justfab)) is executive of a company which conducts deceptive practices, why shouldn't they be personally responsible? Where, exactly, do we draw the line? I would argue that once the Notional Reasonable People learn about the fraud, we have not only a responsibility but a duty to admit justice. More specifically -- if you know about this deception, but you do nothing, you are complicit. You are now responsible. It's not a matter of choosing to ignore it -- as a participant in the venture economy, you have an obligation. And it would be entirely legitimate to punish you for failing to live up to it.

Specifically, the executives and funders of the VC companies that invested in JustFab should be held personally accountable. The people who reveal the names and home addresses of the executives of those companies will be fulfilling their obligation and doing the world a service -- permitting these individuals to hide behind layer after layer of legal protection is tantamount to personally committing that fraud. Individuals must fear the punishment for them and their families that comes after the commission or effective endorsement of fraud; they must know that we, the technical community, will not protect their abandonment of ethics.

-----


Some people asked why it took her 8 months to find out [3]: she was studying for her Master degree in the US, didn't have a SSN, was using a credit card issued by a bank in her home country, her father paid the bill for her at home and didn't notice anything unusual until she finished her study and came home to look at the credit card bills.

[3] https://news.ycombinator.com/item?id=4592778

-----


Total scam.

-----


Yes, great Business. Great ROI if your are into it ;-)

-----


Interesting that I don't see these kind of complaints at this level about book clubs.

The most popular book clubs all use a negative response model, where when you sign up you get a certain number of books at a great price, and agree to buy a certain number of additional books at the regular club price.

They send you a monthly list of books available that month, with one marked as that month's featured selection.

If you do nothing, you automatically receive the featured selection and are charged for it at the regular club price. If you do not want the featured selection, you tell them via a return card or their website.

An example is the Science Fiction Book Club [1]. The front page has a link to a "how it works" page [2]. Note that the "how it works" page doesn't actually tell you about the negative response aspect. It tells you to read the membership agreement for complete details and links to the agreement [3]. It is in there that you get the details of automatically receiving the featured selection.

(Things are similar for the Book of the Month Club, the Scientific American Book Club, and a whole bunch of others--because they are all actually run by the same company, and are using the same template for their web sites. The Columbia House DVD Club too).

Compare this to the JustFab page. That too has a "how it works" page [4], which is linked to from the front page. That page tells you about the negative response part.

The front page of the book club does say, when touting the initial book offer, that it is "with membership", so it is clear on the front page that you are going to probably have to sign up for some kind of membership to get that deal. The JustFab page does not make it clear that you must become a member to purchase.

With the book club, if you fail to make your negative response, you get a book not of your choosing. With JustFab, you get a credit that you can use on an item of your choosing. My guess is that the vast majority of JustFab's customers buy several times a year, and so they are able to fairly quickly put the credit to use.

So why does JustFab draw so much more fire, when the seem ostensibly quite similar to the book club? I wonder if the fact that their subscription if for credits makes a big difference? The book club pushes a featured selection each month, presumably something they have made a volume deal for in order to get a good price. For this to work, they really need their featured selections to sell well. With JustFab, the credit is generic. If they need to push some specific item in order to support a good price for it, selling credits does not help. Would people find JustFab more acceptable if instead of a credit, they actually sent you an item once a month?

[1] http://www.sfbc.com

[2] http://www.sfbc.com/howitworks

[3] http://www.sfbc.com/membership-agreement

[4] http://www.justfab.com/how-justfab-works.htm

-----


With a book club, you receive something of at least nominal value each month, which also serves as a clear reminder of your ongoing relationship with them. The "club" in the name is also a not-so-subtle cue. JustFab has none of these aspects. No cues, no hints, no reminders, nothing of value unless/until you go there again or check your credit card bill. You might think that's a trivial difference, but I think it's enough to explain the different reactions.

-----


>> Interesting that I don't see these kind of complaints at this level about book clubs.

Don't be obtuse. There are TONS of complaints about The Book of the Month Club, Columbia House, et al. Ask ten people who signed up for Columbia House record club and nine of them will tell you what a horrible experience it was.

Even with the slightly scummy nature of "X of the Month Club" companies, JustFab stands out. The SFBC page you link to has two very prominent links to "HOW IT WORKS" which state (in overly salesy language) that you're signing up for a book club, not just buying a single book.

JustFab.com, on the other hand, has a section called "HOW IT WORKS" right on the home page. There is no mention of any subscription or club features in this section. JustFab also has two "HOW IT WORKS" links, but one link is below the fold and the other is much less prominent than the SFBC link.

But it gets worse! JustFab's "How JustFab Works" page does not mention anything about a subscription or club until the third section down, way below the fold on most monitors.

Here's the bottom line: "X of the month" subscription businesses are ethically questionable, but not illegal. JustFab heads down to the bottom of the barrel by concealing its true nature to a greater extent than other subscription companies.

-----


You don't see these kinds of complaints because the book clubs have far fewer customers and aren't raising $100+ million. The SFBC is very poor; I spent a couple of minutes looking for how much you might pay each month, to no avail.

-----


On the front page it say

"5 books for $1 each with membership"

I think that makes it clear this isn't a one off purchase.

-----


In DK (possibly EU) we have laws that mandate the actual total minimum cost to be prominently shown when you buy something and companies are regularly fined by the marketing board for misleading information there.

So if you buy a $1 cell phone, but it requires you to sign up for a 12-month $50/plan and oh, there's also several $5/month fees in small print -- then that's the total minimum cost you pay must be shown

For loan type products, the effective yearly percentage cost for the loan must be shown. So if you look at one of those typical "quick loans" like https://folkia.dk/ where everybody can get a loan..., well you an see that borrowing 3000 DKK for 30 days is going to cost you a yearly effective interest of 987% if you asked a bank for it.

-----


While that helps in a lot of cases, I don't think it would here: the minimum cost is not any higher than the one pair of shoes, because there's no required contract period, and you can cancel immediately. The scammy part is that this isn't made particularly clear at all, and so people end up unwittingly paying for months of a subscription before they realize and cancel.

-----


What worries me is that the what is probably one of the major credit check agencies in the UK and some other countries is also running business the same way. Experian offers a service where you can check your own credit score online for around £6, but actually also signs you up for a £13/month service after that which is also easy to miss in the small print. You also can't cancel this online, you have to phone them. The whole phone call covers two things, one is that it's another method to retain you by letting you update your personal information and then letting you check within a day or two if the updates brought you more information about your credit score. The other is that the personal information helps them have better information about you to give to their customers who use them for credit checks.

-----


The law should be:

Where reasonable you should be able to cancel by the same method as you signed up.

E.G. if you can sign up on a website, you should be able to cancel on the same website.

-----


This is why Federal law in the United States says consumers are eligible for a completely free credit reports from each of the 3 credit reporting companies. (http://en.wikipedia.org/wiki/Fair_and_Accurate_Credit_Transa...)

This report can be accessed though https://www.annualcreditreport.com which is jointly operated by the big 3.

This is the only site for a free credit report. Everything else is a scam.

EDIT: I see you actually meant credit score, that's a bit different.

-----


Thanks for the post. My wife shops online a lot and has a new sites checkout process almost in muscle memory. After looking at the site and the screenshots here I can say that she would absolutely fall for this scam and we'd end up dealing with the hassle of cancelling things and reversing charges and all that.

Total and outright scam. I bet in a class action, the plaintiff could even make a decent RICO case out of it and triple the damages.

-----


Clearly indicated on:

http://en.wikipedia.org/wiki/JustFab

Obviously the VCs did diligence - however they must have considered the shady business as an acceptable risk factor.

I think the answer to what you are asking is many businesses start in the grey zone. Recently many folks made huge bank with recurring billing with no notice. Ring tones and internet games both went that path. Justfab seems to be breaking into a new industry with that same business model.

You should consider that most people consider this nonsense the fault of the purchaser, 'buyer beware'. Gym memberships are a classic example of this.

-----


If you look at the edit history of JustFab wiki page, you'll see most of the stuff related to their shady business practice was added after last year's discussion [3]

[3] https://news.ycombinator.com/item?id=4592778

-----


I don't think it's common practice to look up an e-commerce site on Wikipedia before purchasing.

-----


Just checked out their UK fan page for Facebook, 20k likes.

Of the most recent 15 "posts by others", all in the past week, 5 of them are people that appear to be furious about being tricked into subscribing.

http://i.imgur.com/NDVZbHM.png

-----


Because VCs aren't interested in building a sustainable business, only something they can dump on a greater fool in 3 - 5 years for 10x return.

-----


The spin of the whole "disrupt everything" kind of cons the young and energetic in to do the hard yards before the flip.

You don't often hear about individuals making any kind of real difference in social areas of society that are hurting, yet if you build some kind of online service that provides some kind of marginal benefit you're cast as a hero as long as some cashed-up multinational buys you out?

I'm all for fun and profit, but I'll call a spade a spade, and all this flipping at the expensive of multibillionare corporations ain't really disrupting anything. Especially if the service is bought out and shut down, which appears to happen often.

It seems a nice safe bet is to iterate quickly on a niche that big-co is trying to break in to. They see you as a threat and their strategy is to buy you out and either a) integrate you, or b) shut you down completely.

Hooray for progress! Or is this the bad side of capitalism?

-----


Just Wow, what a clever scam. Hardest thing must have been getting a merchant account for this - does anyone know who provides them with a merchant account / credit card processing? And how do they manage to tolerate the chargeback rate without being shut down by Visa etc?

Lots of these operations around, but usually remain small due to credit card companies shutting them down quickly. JustFab has been around for a couple of years. How did they manage to stay under the radar of credit card companies? And/or keep their chargebacks under the limit?

-----


My girlfriend's sister got bitten by the Justfab scam. Apparently when she called to cancel, they refunded her easily. That's probably how they manage chargebacks. If people are pissed enough to call, don't make it so hard they do a chargeback.

-----


It's not quite that bad. The 39.95 ends up being a credit that can be applied to a future purpose. And they are pretty upfront about how it works without one needing to "read the entire 2,500 word" TOS.

I don't love the model but I don't think "scam" or "fraud" is accurate.

-----


Here's the above the fold of their How it Works page as seen on an apple LCD.

http://d.pr/i/ltch

Is how it works clear or am I missing something?

Here is their FAQ

http://d.pr/i/beRt

It takes over 2800 characters and 507 words before a single mention of a membership charge with no mention of recurring until the following paragraph.

Is that clear?

-----


If the goods being sold (subscription) is not what the reasonable consumer thinks is being sold (one-time purchase), it is a scam, regardless of points and credits. Just like if you stay once in a hotel and they subscribe you to a timeshare without your knowledge, it'd be a scam regardless of the fact that you could use your timeshare for a week every January.

-----


Check out their previous checkout page:

https://news.ycombinator.com/item?id=4592827

-----


It is because of websites like these, I love my credit card's Virtual Account Number generator. It gives me a new CC number every time, with 'Dollar amount' and 'Valid until' limits. I always use a new number to sign up for all sorts of 'trials' etc. Never ran into problems with zombie billing.

That said, scammy company is very scammy!

-----


Which credit card company is that, in which country?

-----


There was a discussion earlier in this thread about virtual card numbers.

https://news.ycombinator.com/item?id=6456044

-----


India's HDFC bank has this facility. And you can even create instant virtual credit cards out of your bank account with a custom limit and expiry dates.

-----


In this instance, Citi Dividend World MasterCard in the US.

-----


Because it's not technically illegal what they are doing and they're doing it successfully. If there are people who think it's ethically ok to run a website that way, then there are probably people who will invest in it.

To me, it seems borderline.

-----


When some thing is not technically illegal, but still fools consumers, it is a scam. Other wise, it would be illegal. The borderline, is exactly where scammers try to dance.

-----


Hey HN- I am an insider to this business and in the subscription commerce space and know these companies well. Here are a couple high level insights about this business:

Dark Pattern: of course, but we call this conversion optimization. We try to make the checkout process as easy as possible to minimize friction. Give customers a great offer, get the credit card, and they will opt-in to the subscription and forget tomorrow.

Negative Option: The billing model is one in where you purchase, or get a free trial, and you are automatically enrolled until you cancel. Think about the old Columbia House DVD club or BMG (if you are old enough to remember). We call this "breakage". This is what makes the model work. If every customer picked out shoes every month, or they automatically shipped every month, they would lose money. This is because the cost of the shoes + shipping doesn't leave to much room for margin. This also allows them to front load their marketing dollars and scale - spending $50+ to acquire customers, which eventually become profitable as customers continue to get billed month over month.

Tricks & FTC Compliance: I do notice on the billing screenshot that they have an opt-in checkbox to the VIP club (subscription terms). However, these are behind a link, which is against the FTC guidance on negative option marketing. The FTC and Visa & MasterCard require any subscription to have an opt-in box which the customer agrees to the amount, billing frequency, and customer support info to cancel. They clearly are not doing this, and apparently haven't been caught since it "looks" like just typical ecommmerce.

eCommerce vs. Subscription: Interestingly, JustFab recently acquired ShoeDazzle, who was their primary competitor for years. That was, until ShoeDazzle decided to move away from the subscription model, and go to a retail model. Pando Daily did a whole series about this, and the CEO they brought in to lead it. Guess what? The pure e-commerce model didn't work, ShoeDazzle struggled, returned to subscription, but eventually sold the company for a deep discount of the valuation to JustFab.

Bottom line, they shoes they sell are cheap and fashionable. In fact, they lose money on a unit basis. Yes, there is a small percentage of the revenue from customers that love the service, pick out shoes and pay monthly, but a a majority of the revenue is coming from consumers who just wanted a deal on one pair of shoes.

-----


Their "how it works" page explains this, with far fewer than "2500 words", though it could be clearer.

http://www.justfab.com/how-justfab-works.htm

They have 2 million likes on Facebook. Were all these users scammed?

The "monthly subscription" has recently been a hot e-commerce category. Other sites with a similar model are shoedazzle.com, fabkids.com, musthave.popsugar.com and so on. See: http://www.quora.com/E-Commerce/What-are-the-most-interestin...

So a question is, what's the tradeoff between transparency & making it easy for the customer to cancel at any time, versus locking them in? Lots of businesses make money off of customer inertia where the easy path is to keep paying. Netflix, Tivo, your cable service, phone service, could all plausibly have much worse retention rates if they actively asked you each month if you want to continue paying. Additionally, my cable company certainly isn't going to tell me when my one-year promotional rate is expired and my rate suddenly doubles. Does that make cable service a scam?

Beyond that, you are labeling the business a "scam" because you assert they are hiding the recurring payments from their users. Maybe so, but it would help to have data, rather than "wondering" how many users were unaware of the payments. When they become aware, does the company refund their money? Do they a/b test their signup process to optimize signups versus the later cancellation rate? I would certainly expect they do, and that they have a pretty specific idea of what their dissatistfied customer rate is, what the acceptable (non-zero) rate is for them, and how to avoid skyrocketing it while increasing their signups.

It's not a pretty business on those terms, but it's real, and plays on human behavior, both positive -- people like to receive new stuff in the mail every month, it's an addictive cycle for many -- and negative -- people sign up for stuff online without reading the fine print, or bothering to check their credit card statements.

-----


A quick count from these three websites showed several hundreds customers have fallen victims:

http://www.sitejabber.com/reviews/www.justfab.com

http://www.scambook.com/company/view/146/JustFabcom

http://www.consumeraffairs.com/online/justfab.html

If you google "justfab review" or "justfab scam" or "justfab fraud", there are surely many more.

-----


You've posted this comment three times, and I won't reply on every thread, but let's be clear: these "review" sites are shady operations that extort retailers by aggregating negative reviews and charging to hide them.

Amazon's review is worse than JustFab's on the same site: http://www.consumeraffairs.com/online/amazon.html

You can Google a lot of e-commerce sites with the word "fraud" or "scam" and find a lot of negative stuff. This is the internet.

I don't dispute the fact that there are probably several hundred unhappy customers, as reported the site will do >$100M in revenue and everything costs $40 or less, with 2.5MM+ transactions, it's inevitable, but it's not indicative of a problem.

-----


"but let's be clear: these "review" sites are shady operations that extort retailers by aggregating negative reviews and charging to hide them."

Sounds like a perfect business for you to invest in. Lots of synergies, ya know?

-----


Question: Would you be opposed to a pop-up window which, when the user clicks the pink checkout button, comes onto the screen specifically explaining the subscription program?

I have no doubt it would hugely reduce JustFab's profits.

Dark patterns are bullshit, and your defense of this company is a classic case of cognitive dissonance at work. You don't consider yourself a bad person, so when confronted with obvious evidence of a company you invested in being a scamming piece of shit, you try to find a way to make the company not a scamming piece of shit. In your mind, this may be true. But the rest of us aren't sharing in your delusion.

The world is full of rich people with compromised morals. Please don't be one of them.

-----


That's true, but that doesn't mean that JustFab's businessmethods are not a scam. See the discussion above about not including the Vip-membership in the checkout-flow.

-----


Let's stick to sound reasoning here. Whatever problems JustFab may have, since consumeraffairs ranks amazon at 1 star and 1saleaday at 4 stars, its ratings have no bearing whatsoever on actual consumer satisfaction with JustFab.

-----


JustFab has nearly as many complaints as Amazon while having many millions fewer customers. You're proving the point, not refuting it.

-----


> I don't dispute the fact that there are probably several hundred unhappy customers

You're being disingenuous. You know full well that the 409 1-star complaints filed with consumeraffairs.com are just from people who were motivated enough to file a complaint with that particular site. They are therefore the tip of the iceberg.

They also exclude the quite probably substantial number of exploited customers who don't check their credit card statements every month and therefore are completely unaware that they are paying your company $39 every month. Like for example the subject of the original post.

You know all this FULL WELL, don't you.

This "business" model is designed to ferret out exactly those kinds of people and exploit their lack of attention to fine print and oversight of their credit card activity. It's illegal in Germany, which is why your company had to change its checkout UI to be more clear.. but only in Germany.

This makes me think Matrix Partners has been reduced to a bunch of desperate slimeballs. Guess the days of funding companies like Apple are long gone.

-----


Regardless of what you believe about JustFab, it has to mean something to you that just about everyone commenting about this on Hacker News disagrees with you.

-----


The salient difference between JustFab and any other "of the month" club is that you don't actually get anything every month. You get a JustFab fun buck that is only usable on their site and they go to great lengths to hide that you're suddenly buying those. In a "__ of the month" club, you get a physical thing dropped on your doorstep every month that reminds you of the recurring billing relationship.

In my opinion, JustFab deliberately deceptively does not give you anything to remind you of the price you are paying and therefore is a scam.

-----


Are you kidding me?

When I sign up for TV service, Cable service, or Internet service I'm aware I'm signing up for a service. I wasn't made to believe that I was making a one time purchase, and being sucked into a service I didn't want or was aware I was signing up for. I presumably am aware I have cable and internet.

Nobody is criticizing them for not asking every month if they want to continue. They are criticizing them for tricking users into signing up for something they didn't want and didn't know they were signing up for!

This is an analogous situation. I walk into H&M and see some boots for a good price, and they have said they now only take credit card. Ok, no prob. I sign the credit card receipt and walk out the door. A few months later I notice H&M has been charging me $40 a month every month. I go back there and ask what's up with that? They say, well when you bought those boots, you signed up for our store club, you signed the credit card receipt saying you were signing up! You should have known, it was printed on the receipt! Signing a credit card receipt is part of a normal checkout worflow, and 90% of customers aren't going to notice if there is a subscription printed on there as well.

The point is, the store is set up to be a normal online store, and seems to go out of the way to hide that it is a subscription service.

-----


> Beyond that, you are labeling the business a "scam" because you assert they are hiding the recurring payments from their users. Maybe so, but it would help to have data, rather than "wondering" how many users were unaware of the payments. When they become aware, does the company refund their money?

I think the class action lawsuit might satisfy your curiosity.

-----


The customer they're trying to acquire is the kind that doesn't check their credit card statement in detail every month. So A/B testing cancellation rates and customer satisfaction levels are all mostly irrelevant.

Their lifeblood is the zombie customer who is completely unaware they've got a leech sucking at their credit card account.

-----


I've never heard of this site before, but looking at their page 'How it works', it seems clear it me it's a shoe-of-the-month club, and works similar to things like Disney Movie club, Harry and David Fruit of the month club, or one of various Book Clubs.

The only scummy part would be if they still charge $39.99/month if you don't cancel / skip / select a shoe, without sending you anything. Compare to Disney Movie of the month club where if you don't make a selection or skip that month, you get sent the "Featured" title for that month. Maybe justfab should send you the shoe of the month if you don't make a selection, or maybe they should send a "beauty gift basket".

Otherwise, it looks legit, if you like this sort of thing.

-----


But why would anyone ever look at the "How it works" page? Even if a link to the page were prominently featured on the site (it's not - it's only in the footer), how often do you wonder how a shoe store works?

People go to JustFab to buy a pair of shoes, not to join a shoe of the month club. Check out their front page. It looks like a online shoe store. It doesn't mention the VIP program at all. That's tossed in during the checkout process and it's pretty easy to miss the fact that you're buying more than a pair of shoes.

-----


They have engineered their checkout page to be less deceptive. This is their previous page:

https://news.ycombinator.com/item?id=4592827

-----


This website should definitely be part of the Dark Patterns UX Library. It's sad how people compose UX (and investors invest in) shady user experiences designed to trick people.

http://darkpatterns.org/

-----


Ah, I still remembered your old post.

To me, trying to mislead people (on purpose) is equivalent to scamming. the purpose is the same, just a different method of doing thing.

-----


Wow, they have a lot of negative reviews.

http://www.consumeraffairs.com/online/justfab.html

-----


Oh for god's sakes, did you even look at the site you just linked to? A site that gathers negative reviews to get companies to pay them>

Did you read Amazon's review -- 1 out of 5 stars with 690 reviews, worse than JustFab's? http://www.consumeraffairs.com/online/amazon.html

I'm sure you'll enjoy 1SaleADay, with 5000 reviews and a 4 star rating! http://www.consumeraffairs.com/online/1saleaday.html

-----


Are you really going to try to keep repeating yourself in an attempt to compare this shady business to amazon?

Amazon is in it for the very long run (they just turned a profit this year). Good luck trying to continue to dance this song to the tune of amazon. It won't last. It is likely a legal practice, and your background might blind you into believing that unintended actions by well-meaning consumers is a perfectly reasonable business model to profit from (at least it is more transparent in the beating industry). At least you know that you are in it against the house, in most cases.

Shame on you.

-----


The point is that the ratings on consumeraffairs alone are meaningless as a criticism of JustFab, given that they rank Amazon so low and 1SaleADay so high.

-----


Hehe. To that site's credit, its business model is just as scummy as JustFab's.

-----


Huh, sounds like a rebill scam with the lent legitimacy of VC funding.

-----


> lent legitimacy of VC funding.

Does VC funding really lend legitimacy to anyone except other VCs?

-----


Sure, someone public who was given lots of money by big institutions voted for it with their money. There are a lot of fly by night operations doing this kind of thing, not many VC funded ones that I'm aware of.

-----


> voted for it with their money.

That is "voted for its likelihood to generate profits or be acquired at a high valuation". That's not exactly equivalent to my definition of "legitimacy".

-----


Some people assume that VCs have a reasonable minimum ethical bar.

-----


I think that the real scam is the VC funding. C series!. really!?

-----


Frank and Oak (frankandoak.com) does something similar to JustFab. They just raised a large Series A.

I've been burned by this personally, but ultimately it's really a case of buyer beware so I can't really hold a grudge - even if the tactic is sleazy imo.

-----


I'd expect Amex to charge back the full amount (including the cost of the shoes, actually). If it didn't, I'd be inclined to go for small claims court action against the company, as it's unlikely they'd send an employee to defend $39.95.

-----


Most of you are too young to remember, "Buy now and we'll send you CD's each month for just $9.95 per month, keep only the ones you want, cancel anytime"

This is the same thing. It may feel scuzzy, but they do tell you this up front, and while they hope you forget, it isn't a scam, it is just preying on the uninformed.

-----


If your business depends on people not reading things, then yes, your business is a scam.

And generally speaking, things which "feel scuzzy", are.

-----


If you seem like you'd describe your customers as "suckers", I don't want anything to do with you or your business.

-----


Almost all commercial software, movies and pretty much the entire licensing business model are scams then. Nobody reads the EULAs or equivalent thereof. And if people did read them, and consider thoroughly their implications, then you might see significant drop offs in purchases. Then again this is HN so that sentiment may actually garner a lot of support.

-----


That's different. For most software and movies, people not reading legalese isn't the core of your business. You make money on people buying your DVD, not on gotchas buried in license agreements. (Or, at least, I hope.)

JustFab is different. JustFab's viability depends on people not reading the fine print on the side. As I understand it, their "VIP Program" is their main differentiator.

-----


Well, kinda but not quite.

There's no indication that they'll automatically send you the month's featured item or even email you about what it is and that you're about to pay for it.

Rather, they're silently selling you "Credits" expecting you to forget all about it until you happen to study your credit card report some month in the future.

Maybe not illegal, but definitely shady.

-----


Whether or not this is a scam is unclear and dependent upon how clearly they tell you this upfront. We've seen enough evil UIs to know that there are many, many ways to hide this information such that a reasonable person would miss it.

-----


I just went through it, on the buy page it says

"To become a JustFab VIP Member, simply purchase any JustFab item on this Site and you will be automatically enrolled in the JustFab VIP Membership Program (including the monthly, automatic purchase feature). As a JustFab VIP Member, our experts will send you a customized selection of JustFab items on the 1st day of every month. You will also receive emails, newsletters, special offers and other updates to maximize your shopping experience."

That is pretty clear to me.

-----


You're looking for it. If you instead were simply looking to buy a pair of shoes you would not be expecting anything at all like that. And you'd probably miss it.

It's important to note that the terms are not listed on the page where you enter your credit card information. They're listed on the "Shopping Bag" page which is 3 pages prior in the checkout process. There is nothing to fill out on the "Shopping Bag" page. The only action the user can take is to click the "Continue Checkout" button. Most users, myself included, would just quickly click through such a page.

When you go to actually submit your order you have to confirm "I accept the terms of Just Fab VIP Membership Program", but it's pretty common to have to accept terms when filling out forms online and pretty uncommon that anyone clicks the link to read them.

This is pretty insidious behavior on JustFab's part. It might be legal but it's definitely not moral.

-----


yes. When I put my credit card in to an online site I say. "Do I trust these people not to steal my identity, to not over charge me, to send me what I ordered?" and only if all the answers are yes to I push "submit".

That's why I still have a roof over my head and money in my bank account, and there isn't some Nigerian Prince with a Mercedes purchased with my money.

-----


Check their previous checkout page:

https://news.ycombinator.com/item?id=4592827

Maybe they engineered their checkout page to be less deceptive since last year, but the number of victims are still increasing:

http://www.sitejabber.com/reviews/www.justfab.com

http://www.scambook.com/company/view/146/JustFabcom

http://www.consumeraffairs.com/online/justfab.html

-----


It could be made even clearer:

"To become a JustFab VIP Member, simply purchase any JustFab item on this Site. Doing so will automatically enroll you in the JustFab VIP Membership Program. This program will charge your method of payment at the rate of $39.99 USD monthly, and in return, our experts will send you a customized selection of JustFab items on the 1st day of every month that you may choose from and pay for using this credit. Any remaining credit at the end of each month is rolled over into the next month. You will also receive emails, newsletters, special offers and other updates to maximize your shopping experience. Save up for a few months to get that pair of shoes you just can't live without! Any accrued credit is non-transferable and redeemable only through JustFab.com."

However, something tells me this version wouldn't fly during the board meeting.

-----


I actually clearly remember that - and at least they did send me something every month - reminding that my card is getting charged. And yes, it still felt scammy and I was glad to unsubscribe as soon as possible. Here - this is definitely anti-pattern designed to hide the fact that you are not really buying an item, but instead subscribing to something that will charge you monthly with nothing in return...

-----


"It isn't a scam, it is just preying on the uninformed" - a bit oxymoronic, no?

-----


I'm old enough to remember those.

I also know that those dubious tactics were used to draw people in, but in the end there had to be explicit consent to the subscription model, hence they always emphasized the "you can cancel anytime" part.

JustFab doesn't do that. It crosses the line from "scuzzy" into "scam" by totally obscuring the fact that they are a subscription based service.

-----


This is also how Joe "Girls Gone Wild" Francis made his millions.

-----


Business such as this is what makes us have to raise our consumer shields up 100% of the time.

I'm so very fucking tired of this.

-----


RoadRunnerSports has the same model. I got VIP on checkout (actually the agent on the phone gave it to me) four years ago for free shipping. It them autorenewed for $25/year the last three years, despite no interaction on my part with the company.

The reason it annoyed me is there was no billy email telling you you'd been renewed, no disclosure that this would happen, and even your billing and purchase history when you logged into the site had no mention at all of the charges. Clearly an effort to prevent you from noticing. Also a reason they've got a heap of BBB complaints. Quite sad that this remains a business model.

-----


This is the reason in India the central bank does not allow companies to store credit card information. In such a case, the consumer has to authorize every transaction, so scammers cannot get away by taking the credit card details once.

-----


Funny thing... this post just disappeared from the home page.

-----


At first I thought it would be on a second page, or third but it's not. Story has a lot of comments/upvotes, isn't it what makes story stay on the first page, high up top? How does it work? Was story moved manually?

-----


Very likely. Big money talking here, it seems. It was almost at the top when I first spotted it, I opened the link on a second tab and after going through the comments I went back to the previous tab to refresh and see how many upvotes it received since I started reading it. And... it was gone.

-----


I am honestly more than shocked that it has disappeared from the main page. Today I asked a friend that I met for lunch if he had heard about the JustFab article today. I was certain he would have, because he frequently looks over the top HN articles during the day. I wish there were more transparency in how articles get buried like this one was.

-----


Me too. Some posts just show up on the top of home page with no discussion and not many votes. Also, how can a comment get downvoted? (is that a word?)

[Edit: found the answers for my questions: http://ycombinator.com/newsfaq.html]

-----


Lots of speculation about how hard this is for people to navigate, here's some examples of people bitten by this

http://www.elkgroveonline.com/forums/topic/105057/beware-onl...

and the text of the class action filed in 2011

http://www.scambook.com/blog/2011/10/justfab-com-justfabulou...

-----


Pay attention. There is no solution to this dark design short of caveat emptor. I agree, justfab.com are using deceptive design practices; dark design frustrates me as well as many who understand that it is designed to take advantage of the less sophisticated consumers.

Why did your girlfriend not look at her credit card bill for 8 months?

Godaddy.com was one of the first to cross the line to unethical dark shopping cart design. what about their domain registration privacy product. It is free for the first year but impossible to cancel.

-----


Leeching money off people this way is a time honored tradition - record, cassette, cd and book clubs etc, arguably AOL dialup, any "free trial" that discretely rolls over into indefinitely charged accounts till you realize and go back and cancel that service you barely tried once.

They can raise money because it works, it's legal if not ethical or tasteful, and in their particular case ... they've figured out how to scale enormously.

-----


I think the big difference is that each of your examples are clearly marked as X of the month clubs. You know what you're buying. With JustFab, you don't. You think you're buying a pair of shoes.

-----


Never invest in a company that doesn't provide a genuine profit to its customers (and other stakeholders). Businesses are cooperative relationships between stakeholders, if a business just exploits its customers, it won't be a business very long.

Whether the checkout page is deceptive or not (and it is!): does anyone actually want to get a 40$/month minimum 1 year membership? Who would want to buy all their shoes on this one particular website, an willingly enter a contract where they have to click a button once per month or get a 40$ penalty? That's just bogus, all of the conditions are so strongly in favour of the vendor that it's clearly not a business - it's just exploitation/a scam.

You might be able to make a quick win and run away with something like this before the business falters, but more likely you won't be that lucky.

-----


Most VCs delegate diligence to 22 year olds that don't really try the site or startup of the startup they invest in.

This should not be surprising.

VCs deliver risk-adjusted returns way below the S&P 500Most

http://www.avc.com/a_vc/2013/02/venture-capital-returns.html

http://www.kauffman.org/newsroom/institutional-limited-partn...

And VC's subtract value from the startups they invest in.

http://techcrunch.com/2013/09/11/vinod-khosla/

-----


I think it is definitely fraudulent on the website's part, but I am intrigued by the fact that you girlfriend did not notice the charge on her card for 8 months? May be she was away from her home and busy with her studies but didn't keep a tab on her finances? Where the money is coming and where it is going? Didn't she get her credit card statement in email or she can't see it online on her card issuer's website?

I really don't understand how can one fail to notice a monthly charge, month after month after month. I think this kind of gross financial negligence on part of the customers is what bolsters these fraudsters and their business model of charging a monthly subscription.

-----


The credit card was issued by China Construction Bank. China's financial & banking system is not as advanced as the US, many Chinese people don't use online banking at all.

Her father was the main card holder, and she was using the second card, her father paid the bills every month as soon as he received the paper statement, he didn't notice anything suspicious.

-----


What you just did was "blame the victim" and basically green-light the asshole company's behavior.

You're shifting the blame away from the scammers.

-----


This thread and it's companion thread about the class action suit against justfab have just been pushed right off the homepage. Too bad, it seems like it is a thing that can't be spread far and wide enough.

-----


See, this is why PayPal manages to skim off the top of everybody's purchases and make bank - I no longer trust any online purchase company with my credit card information, because credit card companies don't do a great job at preventing this stuff except for after-the-fact chargeback mess (which is bad for both consumers and vendors).

Paypal et al force this kind of agreement to be properly explained up-front. Paypal's monthly recurring thing is clumsy and half-broken, but it's not unclear and can't trick you.

-----


What an innovative company that wraps up a questionable practice into an yet another good looking shop with "amazing growth." The VCs might have taken that as an innovation.

-----


This is why I keep the balance on the debit card I use online at $1.xx, trading the inconvenience of having to transfer funds to it before each transaction for peace of mind.

-----


She didn't check her credit card statements in 8 months?

-----


this has the potential to be much worse than a shady checkout screen. for every vip charge they aren't even shipping a real product. they give credits. if a company files bankruptcy those credits and gift cards will be worthless because it is considered a liability. so they don't even have to keep a real inventory (which would be an asset with real value).

(1) get funding (2) ? (3) bankruptcy (4) profit

-----


Let's face it, the owners and investors of this scam are likely engaging in criminal behaviour and should be charged. Have the police been notified?

-----


They must have unusually low chargeback rates. It doesn't seem like they are that bad of a deal in the scheme of purchasing clubs like this, right?

-----


I think it's a scam, however I'd like to point out that by virtue of being honest, it could be avoided. If you are honest, you'll think "this is too good to be true", and rather than thinking "ha ha, fools, they'll make a minus on this and I get cheap shoes" you'll look closely for a catch.

That's not an excuse for the company at all, of course.

-----


"This is too good to be true?"

Um... no... Not at all. Not in the least.

They are your classic fast fashion shoes (http://en.wikipedia.org/wiki/Fast_fashion) fast fashion is cheap. Go into your local Forever 21 and look at the prices, especially the shoe prices. I can buy a whole wardrobe there for under $100.

These shoes aren't built to last. They are built fast and cheaply to capitalize on current trends.

I bought some boots last year for $30, and now they need replacing this year because they are starting to fall apart. I don't wear them every day, or even close to every day, and not during the summer. They were not built to last. I knew they weren't built to last.

-----


Yeah but I think they said the shoes cost 79$ for non-members and 30$ for members (don't recall the exact prices). So you could wonder what they get out of membership to make up for that.

-----


No. That appears to be a marketing ploy. There appears to be no way to buy it without joining "VIP". "Regular" price is just to tell you how much you "saved" to make it look like you're getting a great deal. It's the oldest marketing ploy in the books.

-----


Here's the Form D for the latest JustFab raise: http://www.sec.gov/Archives/edgar/data/1531017/0001531017130...

Confirms JH (see above..) sits on the Board and represents Matrix

-----


I will never accept venture funding from anyone who has invested in JustFab. Investors are the gatekeepers, and in this case have failed their moral obligation.

https://twitter.com/rleshner/status/383675138153017344

-----


While it seems to me like this is a scam, the bottom line is that everyone's interpretation of the communication of the terms of service is subjective.

The site could stay exactly as is and not be a scam if they let you at any time "return" your $39.95 shoe credits for a full refund, no questions asked.

-----


This is why I have my credit/debit cards cancelled and re-issued once or twice a year. I can't be bothered to spend several hours on the phone trying to cancel scumbag/parasite operators like this (AOL was notorious for this back in the day).

-----


Taken straight from Matrix Partners's website (investor in JustFab): "Don and I are aggressive guys, and Matrix approaches our business the same way. - Adam Goldenberg, JustFab"

Choose investors that match your ethics I guess.

-----


I don't see this different from what MS used to do with Xbox Live subscriptions in summer... at first the charged $1 for one month, but you have to cancel the subscription before the month ends in order to not being charged again.

-----


How can I short this stock?

-----


Nobody seems to have mentioned the fact that a well known celebrity, Kimora Lee Simmons, is the president and creative director of this company, no doubt a huge factor in attracting VC attention.

-----


The company's tactics have been thoroughly eviscerated here, as they should be. This is clearly misleading and I don't think I can add much there.

But, here's something else that I find funny: the membership fee is $39.95/month, which then entitles you to buy a pair of shoes for an additional $39.95/month. They state that this price is "up to 50% off". So, if you only buy one pair of shoes in a month, and the discount is anything less than 50% off, then you actually lose by being a VIP member.

And, even given the maximum discount of 50% off, you would have to buy at least two pairs of shoes each month to come out ahead vs. just breaking even.

I am sure that there are people who buy shoes at this rate, but I am willing to bet that many do not consider this in their calculus, and the company knows it. I would guess that many assume they are getting a deal, as long as they "use their memberships" and buy at least one pair of shoes each month. And, almost certainly, none of them think think they could actually lose as a VIP, so long as they make one purchase.

This is not as overtly deceptive as their site design, but it underscores that their primary business model relies upon their customers' lack of understanding in one way or another.

-----


Even if I agree that this is a scam and a dark pattern, with the subscription they give you a "credit" to buy a pair of shoes, so you get (at least) one pair each month for (at least) $39.95/month.

IF, you go there to choose them.

-----


Thanks for the clarification. I stand corrected. So, we're just back to the original scam, then.

-----


"The company's business model and credit card practices have been criticized as deceptive. In October 2011 a national class action lawsuit was filed against Just Fabulous, Inc."

- Wikipedia: http://en.wikipedia.org/wiki/JustFab

-----


This will be a great sample for the study a few years from now that tries to identify the source of the next boom and bust. I hear the real estate market is heating up globally.

-----


guess it's time for HN to wise up to the fact that investors aren't just benevolent gods handing out opportunities from above

-----


meetup.com misled me into a recurring charge. i thought I would need renew the next month. guess i didnt read the fine print right.

-----


voted up the topic and let more people be aware of it to avoid traps.

-----


launder all the moneys!

just kiddin.

-----


Amazon do basically the same thing with their prime membership, although they do refund if you notice and complain early enough (offer a free month and then start charging unless you opt out, whilst making it far from obvious that you have to do so).

-----


> Amazon do basically the same thing with their prime membership, although they do refund if you notice and complain early enough (offer a free month and then start charging unless you opt out, whilst making it far from obvious that you have to do so).

No, its quite obvious that you need to opt out if you don't want to pay -- they explicitly say the membership will be billed to the credit card attached to your account at the end of the free period, and force you to attach a credit card to your account if you don't have one already attached in order to sign up for the free Prime trial -- when you sign up, though its also easy to forget afterwards. But they give you a complete refund anytime in the paid period if you ask, as long as you haven't used any Prime-exclusive benefits during the paid period.

And its a zero-friction, click-a-button, cancel-and-get-refund thing.

-----


Amazon explicitly says it's a paid program that costs money and you have to explicitly join it through process separate from buying stuff. Offering free trial period and then charging is very standard approach, automatically enrolling with sale is not.

-----


They were offering it with a purchase (as a way of getting free shipping), if I remember correctly. Alright, I wasn't automatically enrolled, I had to check a box. It was still deliberately misleading.

-----


The other difference worth noticing is that albeit being a bit unclear, Amazon's Prime is far to be as shady as JustFab's darkpattern since there's a huge modal window popping during the order.

-----


Perhaps I shouldn't have said 'basically the same thing'. They both deliberately mislead users into subscribing, Amazon is just more subtle.

-----


It is nothing to do with doing the same thing or offering the same service, its about how its is sold to unsuspecting customers.

-----


Perhaps you shouldn't have.

-----


There was already a refund request process in place, preempting the inevitable complaints. They knew they were misleading people so they could make money on the back of those that aren't too attentive to their bank statements. I suppose everyone down-voting me thinks that's just great?

-----


Nope. EVeryone downmodding is well aware that Amazon doesn't hide the subscription - in plain sight or elsewhere. When you sign up for prime, you know that you're signing up for a subscription service. There's no doubt. Things like "try it free for 30 days" in bold letters make it very clear.

I've also never seen a default behavior of enabling prime.

-----


"Try it free for 30 days" is very different from "Try it free for 30 days but if you don't cancel, we'll charge you from then onwards" - especially when Amazon already have my card on file from previous purchases.

-----


To me it seems implied? "It is free for 30 days but then it is not free anymore."

I don't know, maybe I read too much into it - but when I signed up, I was aware that I was both getting 30 days free, and that I would pay for it after. And I don't recall that I had to read any fine print to glean that understanding.

-----


I may have been naive and I won't make the same mistake again. However, most people are used to trials expiring and being forced to explicitly upgrade to continue using X product. This practice seems scammy because it is something unexpected to a lot of users, and I'm sure whoever came up with it knew full well that people would be misled.

-----


> However, most people are used to trials expiring and being forced to explicitly upgrade to continue using X product.

Actually, the free trial period with automatic billing at full price at the end of the period is a fairly common model that people in the US are used to (even if they don't like it); either it or the very similar discounted introductory period with automatic billing at full price at the end of the introductory period model is used for almost every periodic membership-based service that exists. So, I doubt very much that your statement about what most people are used to is accurate. (It may be what your experience genuinely was and the basis for your expectation despite the very clear explicit statement to the contrary that Amazon provides with free Prime trials, but I don't see any reason to believe, and have plenty of reason to doubt, that it is generally the case.)

And Amazon makes it unusually easy to cancel it for a full refund after the trial has expired and the full membership has been charged.

-----


Prime is a membership. It even has it in the name! How is that the same level of misleading?

-----


It was offered with a purchase as a way of getting free shipping. It was not at all clear to me that I would have to opt out rather than my membership just being cancelled unless I paid a fee. It felt deliberately misleading and it seemed many shared my surprise when I went looking for complaints afterwards.

-----


Nice try shady investor.

-----




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | DMCA | Apply to YC | Contact

Search: