Owner of FabKids, JustFab and ShoeDazzle Settles Deception Charges

The online clothing retailer behind FabKids, JustFab and ShoeDazzle has agreed to a multistate settlement over allegations it tricked consumers into enrolling in “VIP” memberships and then made it difficult to cancel. FabKids’ deceptive pricing tactics and hidden subscription were the focus of a previous TINA.org investigation and complaint.

The settlement requires that the parent company, TFG Holding, Inc. (formerly known as TechStyle and Just Fabulous), issue automatic refunds valued at around $3.8 million to consumers who meet the following criteria:

• Enrolled in a FabKids, JustFab or ShoeDazzle membership prior to May 31, 2016.
• Made only one purchase.
• Did not “skip” a month to avoid the recurring monthly membership fee (which ranged from $39.95 to $59.95)

But consumers may also be compensated if they have an existing complaint regarding their VIP memberships or file a new complaint by emailing TFGHoldingResolutions@jfbrands.com.

In addition to consumer refunds, the company will pay a total of $1 million to the jurisdictions involved in the investigation, which comprises 32 states and the District of Columbia.

The regulators alleged that TFG Holding lured in shoppers with offers of discounted pricing while failing to adequately disclose that purchasing the discounted items enrolled consumers in an autorenewing monthly VIP membership program. Then, adding insult to injury, the company made it hard for consumers to cancel their memberships, resulting in thousands of dollars in unwanted charges.

Under the settlement, the company is required to clearly and conspicuously disclose the material terms of its VIP memberships, including when prices are dependent on signing up for a VIP membership; refrain from falsely representing offers as time-sensitive, such as through the use of deceptive countdown timers; and provide a simple online mechanism for consumers to cancel their VIP memberships, among other things.

The jurisdictions that negotiated the settlement are Alabama, Arkansas, Connecticut, the District of Columbia, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Washington and Wisconsin.

TFG Holding will also pay more than $330,000 to Minnesota to settle allegations by the state’s attorney general that it misrepresented the price of goods offered for sale in retail stores in the state by adding a surcharge between 3.75% and 5.25% at the point of sale and labeling it a “tariff” fee.

“Bad business practices are never in style,” Ohio Attorney General Dave Yost said in a press release announcing the multistate settlement. “Consumers should be able to trust what they’re signing up for, not get snagged in a membership scheme.”

Oregon’s attorney general, Dan Rayfield, warned other online brands not to follow TFG Holding’s example:

We’re seeing more online retailers use subscription traps and manipulative designs to make people spend more money than they intended. This outcome sends a clear message: Whether you’re a global brand or a small online business, you don’t get to build profits on deception.

TINA.org has seen this subscription deception first-hand.

The multistate settlement comes four years after TINA.org investigated FabKids’ deceptive VIP members-only pricing.

In the lead-up to the 2021 school year, FabKids ran ads for a back-to-school sale on shoes offering two pairs starting at $9.95. But there was a catch, hidden in the fine print – the offer was only available to consumers who became VIP members.

As part of its investigation, TINA.org reviewed complaints from many consumers who said it wasn’t until they saw the VIP membership charge – or charges – on their credit card or bank statement that they realized they had signed up for a recurring monthly membership.

“I am absolutely beyond mad to find out that Fabkids has been charging me $39.99 per month!!” a consumer wrote in a review on FabKids’ BBB page in July 2021, citing unauthorized charges totaling nearly $300. Another unwitting VIP member said in a BBB review:

They charge your card $39 every single month even if you do not shop that month. I would have never even shopped on their website if I [had] known that. No where did I see I would be charged $39.

Following the investigation, TINA.org filed complaints against TechStyle (as the parent company was known at the time) with the FTC, as well as with California regulators for violations of a 2014 court order that prohibits the company from deceptively advertising members-only prices.

It was the second time in as many years TINA.org had alerted California to a TechStyle brand violating the court order after calling out Rihanna’s Savage X Fenty lingerie brand in February 2020.

TFG Holding did not respond to a TINA.org request for comment.

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