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JustFab.com JustFabulous Class Action Lawsuit (2011) (scambook.com)
404 points by jacquesm on Sept 27, 2013 | hide | past | web | favorite | 72 comments



JustFab was founded by Don Ressler and Adam Goldenberg in March 2010. (0, 1)

Series A round of $33 Million was raised in September 2011 (2), led by Matrix Partners' Josh Hannah @jdh (3), Technology Crossover Ventures participated.

A national class action lawsuit was filed against Just Fabulous, Inc. in October 2011 (4).

Series B round of $76 Million was raised in July 2012, investors included Rho Capital Partners, Matrix Partners, Technology Crossover Ventures, Intelligent Beauty (2)

Series C round of $40 Million was raised in September 2013, investors included Shining Capital, Technology Crossover Ventures, Rho Ventures, Matrix Partners, Intelligent Beauty (2)

(0) http://www.matrixpartners.com/entrepreneur-stories/adam_gold...

(1) http://en.wikipedia.org/wiki/JustFab

(2) http://www.crunchbase.com/company/justfabulous

(3) http://www.matrixpartners.com/team/josh-hannah/

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


So how did that class action lawsuit work out?

And isn't this more something for small claims court? You save a lot on lawyer costs that way.


That works well for getting just your money back. If you're upset about the whole thing and want to shut it down or get their business practices changed, a class action lawsuit is the way to go.


It sets such a terrible precedent that a company like this can raise so much money. And that the VC's involved can't admit that there is, at the very least, a "dark pattern" involved in luring unsuspecting people to pay what they do to justfab.com.

On the other hand, the Series B is closed, and no one involved really gives a damn what we think about these dark patterns and scammy activities. However, we CAN publicize it, and expose the investors involved for the unscrupulous and amoral people they apparently are.


YC funded and PG defended a company whose entire business model is "let's spread crapware using opt-out checkboxes in installers that most people will not pay enough attention to". This is nothing new, I don't know why people seem to expect VC to be of better virtue than others means of founding a company.


>I don't know why people seem to expect VC to be of better virtue than others means of founding a company.

Because they talk the game.

For example, here's Reid Hoffman, another VC on a pedestal:

"When I graduated from Stanford my plan was to become a professor and public intellectual. That is not about quoting Kant. It's about holding up a lens to society and asking 'who are we?' and 'who should we be, as individuals and a society?"

But then he went on to be a major funder of Zynga, which in its heyday was a scummy, spam business. Everybody knew it. Made his money and got out. Now it seems LinkedIn resorts to many of these same deceptive tactics, as evidenced by recent HN articles.

I don't understand why we hold these individuals in such high regard.


That would be this one:

https://news.ycombinator.com/item?id=5059806

PG's response is here:

https://news.ycombinator.com/item?id=5092711

It's not as strong as I would have liked but it is definitely a lot better than the one by the Matrix partner wrt justfab.com, for instance, PG actually leaned on the company to improve their practices somewhat.


It's interesting how that one borderline investment seems to have tainted PGs brand of percieved ethical investment. It's risk profile is no longer bounded by the company door, but affects the Ycombinator brand as a whole for future startups.


It's a case of damned if you do, damned if you don't. He could have simply let it go but instead chose to stand up for his investment. This in turn led to a careful parsing of his words and as far as I can see short of divesting or distancing themselves from the investment (which would be unprecedented) still sent a strong message. In for a penny, in for a pound. I am assuming that future YC companies will be looked at a lot better from an ethics perspective and PG's personal and YC's investment involvement with Watsi more than makes up for whatever ethics dent he might have received here.

On a set as large as YC's it should not be surprising there is at least one bad apple either. It's no excuse but it is also not nearly as damning as it could have been, witness that other justfab.com thread for a nice example.


Installing crapware, while a public blight, is not as categorically bad as this company (allegedly) is.


While it is not an exact match, both cases are deceiving the user into getting something they don't want while pretending it's for their benefit.


> It sets such a terrible precedent that a company like this can raise so much money.

But so many precedents already exist. It's this wicked modus operandi for fast growth that a hefty amount of startups go by. You trick users in early in the game (browse around http://darkpatterns.org for examples), when you have attained a large group of users, you distance yourself from your past activities. Common excuses range from "we were young then!" to "we didn't think we were actually misleading users because of this $xyz technically". And of course there's the plain refusal of accepting that any misdeed was ever done.

A lot of the established companies right now grew and expanded precisely because of the dark models. I mean, hey, they just work. My favorite example: http://darkpatterns.org/library/privacy_zuckering/. What's really great is FB can make a great fuss that they're better about the interface now... and the thing is, it doesn't matter. It's a large company, it's established, now it'll continue to sustain itself in a network effects fashion with misleading interface or not. The lesson learned is, just do it, say sorry later. It's like when banks knowingly involved in predatory practices do the calculus about how much the fine for some wrong-doing might be, and usually going for it because the reward attained will be many times bigger than the fine they'll have to pay. Except in this case there is no fine, maybe just some pesky comments rebuking you in some forum.


This even serves as a part of the moat around a successful company. AirBnB spamming craigslist comes to mind as an example of this.


This is where real tech journalists should do their jobs and hold these VC partners personally accountable for this investment.


There are real journalists out there? They must speak something other than English because I have yet to see any that didn't mysteriously die by running his car into a tree at high speed for no apparent reason or committing suicide by shooting himself in the head, twice.

All joking aside, I agree 100%. Where is the tech journalist crowd when like this happen? Are they afraid that they'll get a bad rep with other VC and then not get future stories?


Exactly that. I mean, PandoDaily is funded by the same kind of investors so they have a huge incentive to not rock the boat. TechCrunch does little other than copy and paste press releases. Take the TC article[1] - it's one and only mention is this:

"This model has seen some controversy around how transparent charging is, but JustFab has stuck to its guns in this area."

OK, no need to investigate then! Bravo journalism.

[1] http://techcrunch.com/2013/09/26/justfab-has-raised-another-...


I always thought PandoDaily is a good name, because they are pandering to the stakeholders daily. Online "journalism"! Even CNN is more concerned with celebrities than actual wars.


I just hope you are not referring to the tech journalism which are VC-funded


I don't use Godaddy any more, but I remember Godaddy had something very similar on their checkout process, and you had to individually check off each item to make sure you are not being charged on all these add-on you didn't ask for in the first place.


Punish them. Punish them hard. Let the market do its work. People don't like being scammed, and if this gets out to the larger media, they'll go down or change their practices.

Karma's a bitch, make it hurt.


Hmyeah, so Josh Hannah @jdh (A series investor in JustFab) was defending JustFab in this other thread https://news.ycombinator.com/item?id=6455575 how it's totally not a scam, backed up with a screenshot, clearly showing it to be scammish.

I'd be delighted if we could hear his take on the class action lawsuit.


If anything it just shows how poisonous the Valley culture is. I'm reminded of Matt Taibbi's quote about Goldman Sach's ["a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."] and it definitely applies to a lot of these companies. Anyone doing dark web design, anyone doing linkedin-style "growth hacking"...

Mark Pincus bragged about installing crapware/malware on his customers' computers and did "every horrible thing in the book" and the valley and tech journalism mostly laughed it off. This kind of shit is no big deal here and every day I'm more and more skeptical about whether or not these companies are actually creating value.

Edit: But really though, has anyone else noticed how sour everyone is starting to get about the current tech-boom? Everyone except founders and investors anyway.


Clearly any such class action lawsuit is just another attempt by the populace to shake down an honest and upright business.


I would hope that his lawyer got involved, for his sake, and told him to shut the hell up.


Why would you hope that? This is someone who has made money from this situation, and if it is a scam (which I strongly believe it is), I don't see a lot of value in 'well, for his sake I hope his lawyer told him to be quiet' (because God forbid he demonstrate guilt or complicity in fraud...)


It's just a phrase, jesus, ease up on the INTENSITY coffee. I don't actually hope anything. It's like saying "well one would think".


I'll give you that - in hindsight it did come across as a little leaping-down-your-throat. Duly noted!


Ah but one can hope :) There's always those people who don't listen to their lawyers.


Justfab makes the most scammy pornsite look good.

Not only do they scam you on the way in, they also scam you on the way out, canceling with them is just about impossible.

Credit card companies have pretty strict rules about this sort of thing and I would really like to know if they are burning through merchant accounts, are labeled high risk (with associated fees) or if they are around the industry norm for e-commerce when it comes to chargebacks, refunds and customer satisfaction within the cohort that does not get something delivered to their door each month.

I suspect (but don't have proof) that if the 200K or so silent subscribers (those who don't opt out but also don't get anything delivered) were attended to the fact that there is a silent charge every month that they would cancel en masse and do approximately 1.2 million chargebacks (the costs of those chargebacks alone would take out justfab.com like a pin takes out a balloon).

The bottom comment in that thread about the class action is a nice sample of what this company stands for:

"I have been repeatedly trying to cancel my membership with JustFab.com for 5 months. Every time I call the customer service rep continues to try and diswade my request to the point of 10 full minutes at which point I always tell them “JUST CANCEL MY MEMBERSHIP” and hang up. I believe they are paid commission on every call they take that results in a hang up. I’ve emailed repeatedly and they just won’t cancel and continue to bill me. I am putting a complaint through my credit card and I am hoping this will stop these illegal business practices."

If you're a victim of this scam please realize that:

1) you have consumer protection agencies where you can file complaints

2) you can charge back up to 6 months and every chargeback will cost justfab an additional $25 to $35 per charge on top of the refunded money. In case of 3D secure transactions the initial charge was equivalent to a 'card present' transaction but subsequent rebills are not and you should be able to get those back anyway.

3) if the number of chargebacks goes over certain absolute numbers there will be an investigation and if it goes higher still there might be a cancellation of the merchant account

4) that you can help by telling your friends about the scam, making sure not to turn it into accidental advertising for them

And even if you're not a victim of this scam:

5) you can probably save yourself money if you go over your credit card statement to look for charges like these.

I'm working on a blog post about the venture capital world as seen from the other side to cure some common misconceptions about the type of people that are active in venture capital, this whole story has me wondering if there wouldn't be more good in doing a 'VC's I won't work for' post instead. Yuck.


Thank you for saying what I had came here to say. Just for context, here is a part of the check out page on JustFab:

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

This was provided by a Series A investor in JustFab† and was used to help suggest that it's "pretty clear" that you are joining a membership for $39.95 a month.

Compare this to a slightly different crop, where we only include the portion of the page that contains the "Order Summary", the thing you are ordering. Nothing suggests or hints at a $39.95 membership.

I worked for 10 years in the credit card processing industry handling adult sites. Even we never did anything this bad.

I mean, even the investor flat out admits that it's not called out in any way:

"in the same font size as everything else on the page"

Anyways, really just wanted to thank you for posting what you did.

https://news.ycombinator.com/item?id=6455575


I wasn't able to tell right away from the screenshot, even while knowing ahead of time. I must tip my hat to say that this is a brilliantly executed dark pattern. It is a myopic move on their part because even though they will make some money now, these types of tricks never last in the long run. Plus no one likes to be tricked so these people won't simply roll over, they will be out for the trickster's head.


With some luck this will result in regulation with some serious teeth in it in the case of transgressions.


I'm not the first to jump up for more regulation, and for something like this I'll be the first to admit that it's my responsibility to read the fine print, but this is very deceptive. A line needs to be drawn somewhere and customers need to be protected once it is crossed.

I will add that to protect yourself from these and other payment related issues online, have a special low balance card or get one-time card numbers. I know most savvy members on HN already do this but just mentioning it in case.


Even if you default to opt-in you can make it clear what's going on.

I just tossed this crappy example together: http://imgur.com/fxw9xJJ but that one shows it's pretty clear that you are signing up for something optional in order to Save Money Now. There must be some kind of quid pro quo so people aren't being totally suckered.

That's just one thing; there are a lot more things I think are unethical. I wasn't really convinced this site was a scam until the investor used that screenshot to prove it wasn't.


Wait, "your are activating your VIP Membership"?

That's sloppy. You'd think with $40 a month for shoes (wat) they'd be able to hire a proof reader.


Good eye! And if they would actually send out shoes every month to all their subscribers I don't think there would be a problem. Instead you get credits that can only be spent with them and that can't be redeemed for cash. The vast majority of those will in the long term simply never be redeemed at all.


Just like Audible. Do you get a max number of credits, resulting in paying a monthly fee for no new value, like with Audible?


OT: I spent a good minute looking through my comment for that mistake. >_<


The investor in question is the founder of eHow and Betfair.


Wow. The first time I looked at the image of that page (and mind you I actually spent about 20-30 seconds on it), I definitely thought it was just $39.95 for that pair of shoes. Did not realize at all that it was for a membership. And I like to think that my attention to detail is pretty strong... That's disturbing!


It's pretty funny that they scammed their investors too.


The thing that riles me is that this exact thing turned up on HN 1 year back [1] (and hit the front page), but nothing has changed since then. They continue to screw people.

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


Worse yet, they picked up another round of venture capital. Which makes you wonder how they manage to lose so much money if they are basically scamming people to the tune of 96M per year (200K x $40 x 12). Maybe the customers are not the only ones being scammed. One can hope...


The best (and it really is the best) is to get the word about. Drive this "website" into the ground. The VC's will lose money. And maybe, just maybe in the future they'll think twice about investing in questionable companies.


A good example of this "membership" model done right is Audible.

https://www.audible.com/

How it Works and About Membership featured prominently at the top of the page. When you're signed in, your membership status is front and centre.

This isn't even difficult.


That's how Audible is doing it now, however it wasn't always this way. For reference, see http://darkpatterns.org/library/forced_continuity/.


Audible's response (on that very page) is actually a textbook example of how to deal with a thing like this.


It is, and I'm glad they've changed it. Having said that, this happened to me in 2003 or 2004 - so this wasn't a simple UI goof that they fixed a few months later. Additionally, the process for unsubscribing at that time required a phone call. In any case, the experience left me permanently sour on their company.


Analogous: LA Fitness. You can become a member online, over the phone, in person.

To cease being a member, you have to send a certified letter to a certain address, and you have to make sure it arrives by a certain time (up to two weeks) before your next renewal date.

I read an interview where one worker said they literally had someone whose job was to throw away all non-certified mail, unread.


This is analogous to a premium SMS subscription, and free2play mobile games. It took 10 - 12 years for regulation to kill premium SMS scams. I guess the next decade will be spent stamping out these scum.


There are still a lot of them. All those "you won iPad" mobile ads are nothing more than premium SMS scams.


This thread and the companion thread about justfab.com have just been flagged straight from the homepage. Too bad, this sort of thing is well worth discussing. Being successful should not translate into 'get money from the customer at any cost'.


October 2011 is some time back. Anyone knows what's the status of this lawsuit?


Note that this was filed in October 2011.


Anyone got updates?


According to WikiPedia, they reached 10 million members this year. If it's true (I have my doubts) that'd be $400M/month membership revenue. http://en.wikipedia.org/wiki/JustFab#History

This could be a huge story for some journalist, finding out how they're not getting cut off by the credit card companies, etc. The fact the president is a quasi-celeb (Kimora Simmons) would help sell the story.


Beyond everything else it always shocks me as to how many people buy shoes online. I mean I can never find ones that fit well in the store never mind taking a shot in the dark with some no brand cheapa shoe.


All the reputable sites will let you try on and return items for free.

Also if you have a pair of shoes that fit you well, it's likely that other shoes from the same brand will fit similarly.


Some people own shoes, they don't actually wear them...


With all that money raised I guess the founders have taken enough money off the table that they couldn't care less about what might happen now ...


Founders of companies raising series-C have not generally taken a lot of money of the table unless they were explicitly permitted to do so by some investor. Given the nature of this business you'd have to wonder about the trust level between the operators of justfab and their investors.


Does anyone run text analysis on the comments of this kind of site? Astro-turfing detection would seem like a fun blog for someone to run.


...just take it to 4chan and the news media. Courts in the US are useless to regulate businesses now... just look at check cashing fee class action lawsuits.


Dark patterns are everywhere and a lot of huge companies are using them without any shame. Take ryanair reservation funnel for example.


Reminds me of BMG Music Club


Book clubs and music clubs make it at least fairly clear that they are subscription based. For example:

https://subscribe.hearstmags.com/subscribe/splits/oprah/opr_...

The text is very clear here. Contrast that with the justfab.com language and lay out, on the Oprah site (I can't believe I'm linking to that anyway) the text with the warning sits right between the button and the body text, interrupting the flow of the reader to draw attention to the text, it is also the item closest to the button.

The 'happy flow' clearly includes the warning.


They also deliver a product so at least you know you're being charged...

(Edit: Spelling)


Are there any YC companies that compete with JustFab?


Why enter a subscription to buy clothes? There's thousands of websites to buy clothes from. Without a subscription. Amazing.


Because it isn't obvious that you're entering into a subscription. That's sort of the whole point of this class action lawsuit.


This link is from the end of 2011. Why is it at the top of the front page?





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