Adore Me will pay $2.35 million in a multi-state settlement after the undergarments-maker was accused of engaging in a deceptive marketing scheme. At the heart of the recently-announced settlement are charges that Adore Me offered customers discounted pricing if they enrolled in its VIP Membership Program. Once they enrolled in the company’s program, consumers were charged as much as $39.95 a month, unless they made a purchase from Adore Me or logged into their Adore Me accounts to “skip” the charge before the sixth day of each month. The monthly charges accrued in subscribers’ accounts as store credits, which were supposed to be used on future purchases.
The problem: According to the Attorneys General from 31 states (Alabama, Arkansas, Connecticut, DC, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Washington, and Wisconsin) is that Adore Me made enrollment in the VIP Membership Program, the default selection when consumers made purchases, and did not “clearly and conspicuously” disclose they would be charged $39.95 a month unless they either made additional purchases or took action to “skip” the charge.
Also at issue was how difficult Adore Me allegedly made it for consumers to cancel their memberships, forcing them to “forfeit store credits when they canceled, and using a fake ‘countdown clock’ to mislead consumers into believing that discounts would expire when the clock struck zero,” per Reuters.
In accordance with the settlement, which resolves “alleged violations of [the aforementioned sates’] consumer protection laws” and was negotiated by Washington, D.C., Pennsylvania and Texas’ AGs, Adore Me is now “required to notify all customers with active VIP Memberships that they can obtain a refund of any unused store credits.” In addition, the company “has agreed to make certain changes to its business practices and is prohibited from engaging in any misconduct.” In particular, Adore Me will make enrollment in the VIP subscription an “opt-in” instead of an “opt-out,” and will make improvements to its disclosures about its subscriptions/terms.
“Adore Me lured consumers into their VIP Membership Program without being upfront about the automatic charges and membership terms,” Pennsylvania Attorney General Henry said. “It is illegal for companies to subject customers to recurring subscription charges without giving clear notice and a reasonable way to cancel. Companies who advertise online should take this settlement as a warning: if you break the law, my office will find out and do whatever we can to get Pennsylvanians their money back.”
Adore Me said in a statement that it “strongly values our customer relationships and takes our responsibilities to our customers and subscription management practices very seriously.”
THE BIGGER PICTURE: This is not Adore Me’s first brush over its subscription program. The Victoria’s Secret-owned company was targeted by the Federal Trade Commission, which filed suit against it in a New York federal court back in 2017 for allegedly employing a deceptive business model. (Victoria’s Secret acquired the company in a reported $400 million that closed in January 2023.) The regulator charged Adore Me with violating the FTC Act – a federal law that governs the publication of commercial messages and prohibits the utilization of unfair or deceptive acts and practices in the market – and the Restore Online Shoppers Confidence Act. For several years, “the company made it difficult for consumers to cancel their memberships, including by limiting how consumers could submit cancellation requests, under-staffing its customer service department, and putting consumers through drawn-out cancellation request processes,” the FTC argued in its complaint, which ultimately resulted in a $1.4 million settlement agreement.
At the same time, Rihanna’s Savage X Fenty has faced similar charges, agreeing last year to pay $1.2 million to settle a consumer protection lawsuit waged against it for allegedly misleading consumers about its renewal practices and pricing. According to the August 2022 complaint filed by the Santa Clara, Santa Cruz, San Diego, and Los Angeles County District Attorney’s Offices, and the Santa Monica City Attorney’s Office, Lavender Lingerie LLC dba Savage X Fenty ran afoul of California state law by failing to “get the proper consent or give proper notices for the automatic renewal charges, falsely advertis[ing] the ability to use store credit, and misleading the public over the prices of its products, which include bras, underwear, sleepwear, and loungewear.” Beyond that, the prosecutors asserted that Savage X Fenty “did not clearly disclose automatic charges resulting from VIP memberships.”
As part of the settlement, Savage X Fenty agreed to pay $1 million in civil penalties, $50,000 in investigative costs, and $150,000 in restitution, and to make “changes to its website, automatic renewal notices, and its store credit and advertising practices.”
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