Summary of Action
- uses ads that deceptively promote product prices that are only available to consumers who are bound to the company’s VIP Membership program, not the pay-as-you-go option, without clearly and conspicuously disclosing this fact;
- by default, enrolls consumers into a negative option offer known as the VIP Membership without obtaining consumers’ express consent and without clearly and conspicuously disclosing all the material terms and conditions, such as needing to take affirmative action every month in order to avoid recurring monthly charges;
- falsely tells consumers that monthly charges can be used as store credit at anytime when, in reality, the company keeps consumers’ accumulated unused store credit if their VIP Memberships are canceled, though the company does not disclose this fact in any of its marketing materials; and
- employs dissuasion and diversion tactics so that consumers encounter unnecessary difficulty when trying to cancel their Adore Me VIP Memberships.
As a result of these findings, TINA.org sent a warning letter to Adore Me on April 29, 2016 alerting it to the issues and requesting that the company immediately remedy the deceptive marketing. However, the company did not make any noticeable changes to its campaign, website, or mobile app. Accordingly, on May 9, 2016, TINA.org filed complaint letters with the Federal Trade Commission, the New York Attorney General’s Office, and the District Attorney’s Office in Santa Clara County, California, urging each of the agencies to take action.
Soon after, between May and June 2016, Adore Me made several changes to its marketing as a result of TINA.org’s complaint. Consumers can now cancel their VIP memberships anytime, accumulated store credit can now be used after cancelation, many Adore Me marketing materials now indicate that the advertised introductory price is available only with a VIP membership, and the Shopping Bag page at check-out now shows the Pay As You Go option next to the VIP Membership option (though the VIP Membership is still preselected).
After receiving TINA.org’s complaint, the FTC filed a lawsuit against Adore Me in federal court in November 2017, and simultaneously settled for nearly $1.4 million, which will be used to provide refunds to eligible customers. Following the FTC’s settlement, the New York Attorney General reached a settlement with Adore Me that requires the retailer to pay $300,000 in penalties, fees, and costs, as well as up to $63,000 in restitution to consumers. And the Santa Clara County District Attorney’s Office in California reached a settlement with Adore Me, which requires the company to $600,000 in civil penalties, a minimum of $200,000 in restitution to previous or present California VIP members that lost or forfeited their store credit, and $250,000 worth of merchandise to homeless and women’s organizations in California.