AG Kaul Announces Settlement with Online Clothing Retailer Regarding Alleged Deceptive Advertising and Billing Practices

MADISON, Wis. – Attorney General Josh Kaul today announced a $4.8 million multistate settlement with TFG Holding, Inc., an online clothing retailer that offers shoes, clothing, and accessories across several different brands, including JustFab, ShoeDazzle, and FabKids. The settlement resolves allegations that the company deceptively marketed its VIP Membership Program by automatically enrolling consumers and then made it difficult for them to cancel their memberships.

Of the $4.8 million, $3.8 million will automatically go to eligible consumers and $1 million will be paid to the participating states. The settlement will deliver an estimated $117,652.75 in automatic refunds to eligible Wisconsin consumers.

“Consumers should have clarity about any program they’re being signed up for. And if they choose to cancel, they should be able to do so without any unnecessary impediments,” said AG Kaul.

As alleged, TFG Holding, Inc., offers consumers discounted pricing if they enroll in the company’s VIP Membership Program. Once enrolled in the program, consumers are charged $49.95 a month, unless before the sixth day of each month, consumers make a purchase from the company or log into their membership accounts to “skip” the charge. The monthly charges accrue in the consumers’ accounts in the form of store credits, which can be used on future purchases.

The settlement resolves allegations that TFG Holding, Inc., violated state consumer protection laws in multiple ways, including by:

• Misrepresenting the price consumers could expect to pay for products advertised on the company’s websites.
• Automatically enrolling consumers, without their consent, into a Membership Program that included a recurring charge without consumers’ knowledge, consent, or authorization.
• Implementing and maintaining cancellation policies and practices that frustrated consumers’ ability to cancel the VIP Membership Programs into which they were enrolled.
• Failing to adequately disclose material facts to consumers, including that by purchasing products they will be enrolled in the VIP Membership Program.

Under the terms of the settlement, TFG Holding, Inc. is required to:

• Comply with all applicable local, state, and federal laws, regulations, or rules.
• Clearly and conspicuously disclose the material terms of its VIP Membership Program, including but not limited to the fact that consumers will be enrolled in the VIP Membership Program, the amount and frequency of all applicable recurring charges, and the consumers’ right to cancel.
• Refrain from representing its offers or sales of its products as time sensitive, when they are not, including but not limited to the use of countdown timers to represent or imply that such offers or sales will soon expire, unless the offers are in fact time limited.
• Obtain the consumer’s express informed consent prior to enrolling any consumer in the VIP Membership Program.
• Provide a simple online mechanism for consumers to cancel their VIP Membership Program and promptly accept and process any request by a consumer to cancel their VIP Membership Program and stop the billing and collecting of payments for any recurring charge.
• Promptly honor consumer cancellation requests and cease any further billing.
• Provide all consumers the opportunity to request and obtain a refund of any recurring charge balance accrued within the preceding year; and
• Cease the billing of recurring charges to any consumer who enrolled in the VIP Membership Program on or before May 31, 2016, unless the consumer previously skipped a payment, redeemed a credit, received a refund, or made an additional purchase.

As part of the settlement, TFG Holding, Inc. will also be required to:

• Provide automatic restitution to all consumers who enrolled in a VIP Membership Program on or before May 31, 2016, and only made an initial purchase but no subsequent purchases and never skipped a payment. Wisconsin consumers are expected to get $117,652.75 in automatic restitution.
• Pay restitution to consumers who have an existing eligible complaint against the company that has not been resolved, and to consumers who file a new eligible written complaint with the company or the Attorney General’s office within 90 days of the Effective Date of the settlement that was not previously resolved.
• Pay $1 million to the jurisdictions involved in the investigation.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.