Lingerie startup Adore Me‘s subscription model is coming under fire once again.
Adore Me was, for a time, a media darling. It was challenging Victoria’s Secret’s position in the lingerie industry, and won some praise for selling plus size undergarments, something that Victoria’s Secret does not do.
Now, nonprofit advertising-watchdog Truth In Advertising has filed complaints with the Federal Trade Commission, the New York Attorney General’s office, and the District Attorney’s office in Santa Clara, California, claiming the company utilises misleading marketing practices to trap consumers into subscription billing cycles.
Truth in Advertising filed the complaints on May 9. They largely have to do with Adore Me’s subscription model, which it calls a VIP Membership, through which “members” pay $39.95 to receive a set of lingerie each month — but only if they log on and choose the products they want.
The problems Truth in Advertising highlighted include:
- Automatically enrolling shoppers into the membership program without clear disclosure of all of the terms and conditions;
- The fact that Adore Me keeps unused store credit, and;
- How Adore Me makes it extremely difficult for members to get out of this subscription.
“I think what really focused us on Adore Me was one particular provision in their terms and conditions which I found to be absolutely outrageous,” Truth in Advertising’s Executive Director Bonnie Patten told Business Insider, “which was that when a consumer attempts to cancel this membership, that the company takes any un-used credit from the consumer, and I thought that that was just outrageous.”
Adore Me didn’t immediately respond to a request for comment on the complaints. The company has responded to media coverage of the membership model in the past, telling Business Insider in January that complaints account for only a tiny fraction of purchases on the site.
In January, it had racked up 560 complaints on the BBB’s website. There are more than 100 more now.
“Keep in mind that in 2015, Adore Me counted over 1 million purchases, which means that these 560 BBB complaints account for approximately 0.0005% of all transactions of the Adore Me website,” company CEO, Morgan Hermand-Waiche, said to Business Insider in January. “Needless to say this is an extremely low level of dissatisfaction.”
Adore Me has made it easier for consumers to get refunds. Members can get a refund for the most recent month with just one click, something that Hermand-Waiche highlighted to Business Insider in January. The company does disclose the rules, though the default mode for purchasing lingerie is through the membership, not the pay-as-you-go-option. Hermand-Waiche also stressed to Business Insider that consumers are reminded frequently, through both email and text message, when it’s their time to “shop” for lingerie or “skip,” the latter of which would not result in a credit card charge.
But the scrutiny has continued. Bloomberg recently reported that the company had a 30 per cent spike in refunds with a 15 per cent dip in subscriptions.
“The easier you make the refund process,” Hermand-Waiche said to Bloomberg, “the more refunds happen.”
Which begs the question — could the refunds derail Adore Me’s exponential growth? Sales surged from $1.1 million in sales in 2012 to $16.2 million in 2014.
To Truth in Advertising, this kind of growth is a sign of trouble, not success, Patten said.
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