Listen to this articleThe basics:
- TFG Holdings will pay $1M to settle deceptive ad claims
- NJ consumers will receive $187,205 in refunds
- Company allegedly enrolled shoppers in unwanted VIP programs
- Settlement requires clearer terms and easier cancellation process
The company behind online retailers such as ShoeDazzle, JustFab and FabKids agreed to pay $1 million to settle a multi-state investigation into alleged deceptive advertising and billing tactics, according to authorities.
Under the agreement announced Oct. 23, California-based TFG Holding Inc. will refund a total of $187,205 to consumers in New Jersey who were affected by the now-discontinued practices, New Jersey Attorney General Matthew Platkin said.
According to authorities, TFG misled shoppers by automatically enrolling them into its VIP Membership Program, charging recurring $49.95 monthly fees and making the cancellation process difficult.
This charge would occur unless customers made a purchase from the company or logged into their membership accounts to “skip” the charge before the sixth day of each month. Those fees would then accrue in the consumers’ accounts in the form of store credits, which could be used on future purchases, the state said.
TFG “specifically denies it has violated any consumer protection laws,” including the New Jersey Consumer Fraud Act, the resolution said.
The company did not immediately respond to a request for comment.
Automatic refunds
However, it will issue automatic refunds to consumers who enrolled in a JustFab, Shoe Dazzle, or FabKids VIP membership program before May 31, 2016, and made only an initial purchase and never logged into their account to skip a payment, according to the AG’s office.
Additionally, TFG must clearly disclose all terms of its VIP membership program, provide a simple cancellation process and obtain express consent before enrolling customers. The company is also prohibited from using misleading countdown timers or falsely advertising limited-time offers, the state said.
Multi-state settlement
The settlement was negotiated by attorneys general in Washington, D.C, Pennsylvania, Maryland and Texas, according to officials.
Other states joining the settlement are Alabama, Arkansas, Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, North Carolina, North Dakota, New Hampshire, New Mexico, Nevada, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Vermont, Washington and Wisconsin.
In a statement, Platkin said, “TFG Holding elevated profits above transparency and honesty. New Jersey consumers deserve to know that the deal they are getting is the deal they were promised and that their trust is not violated in the marketplace.”
Elizabeth Harris, acting director of the state’s Division of Consumer Affairs, added, “Consumers have the right to know what they are purchasing with their money. Locking people into monthly payments without their express consent is against New Jersey’s consumer protection laws.”
