EL SEGUNDO, United States — JustFab, the online fashion retailer accused of deceiving customers with monthly subscriptions that are difficult to cancel, says it is reviewing its tactics and customer service practices.
As reported by Buzzfeed, more than a thousand customer complaints about JustFab have been submitted to the Better Business Bureau and the Federal Trade Commission. The company last year settled a consumer protection lawsuit in California for $1.8 million and has been targeted by consumer groups that include Truth in Advertising.
Many complaints concern JustFab's "VIP Membership" program, which costs $39.95 per month. Critics say customers don't get enough warning that they are signing up for a recurring monthly payment when they purchase items and that the subscription can be cancelled only over the phone instead of online or via e-mail.
Adam Goldenberg, co-chief executive of JustFab, says the company is bringing in an third-party auditor to analyze customer service systems and will release findings to the public. Goldenberg has also hired executives to head up "member satisfaction" and says the company has looked at offering customers a way to unsubscribe online. But as of now, there are no guarantees. "Maybe in the future we'll roll that out," Goldenberg said.
Goldenberg said the complaints represent a tiny fraction of the company's total customers and attributed the problems to speedy growth. Founded in 2010 in El Segundo, Calif., JustFab was valued at $1 billion in 2014 and will hit $500 million in sales this year. In addition to its flagship online shop, the company operates Fab Kids, FL2 for men, ShoeDazzle, and activewear shop Fabletics. Fabletics, co-founded by Kate Hudson in 2013, is the retailer's fastest-growing label, with sales tripling from $50 million to $150 million in its second year, according to the company.
Though much of JustFab's website blares the benefits and cheaper prices of being a VIP, the price of the subscription isn't revealed until a shopper gets to the order summary. Goldenberg stood by JustFab's checkout process, saying that numerous screens explain the subscription service before a customer gets to the final purchase. "It is certainly not the company's intention to have anybody be confused," Goldenberg said. "If someone feels tricked, we lose that customer."
"The vast, vast, vast majority of our customers not only understand the VIP model, they also really like it," he said. When you're bringing in hundreds of thousands of new customers a month, you're not going to get everything right."
JustFab customers can choose to skip a month on the app or website, but it's much harder to cancel a subscription outright. Customers have to call JustFab customer service, where a representative tries to persuade the customer to stay aboard the program. This is a tactic long implemented by subscription services, from cable providers to food delivery, to try to retain their customers. "We want to have an opportunity to explain how it works and ideally save that customer," Goldberg said.
Bonnie Patten, executive director of Truth in Advertising, a consumer protection nonprofit, says the number of complaints to the BBB and FTC shows that "articulate, reasonable people are being duped."
"It's a model that allows [JustFab] to make more money," said Patten. "Unfortunately, misleading marketing works. And that's what this company is, in some part, using to be so successful."
By Kim Bhasin; editor: Alex Dickinson.