Online lingerie retailer Adore Me has agreed to pay $2.35 million, including refunds to consumers who were automatically enrolled in a VIP membership program without proper disclosures, reports Reuters. The lawsuit was filed by 31 state attorneys general and the District of Columbia, claiming the online lingerie company deceived consumers by making enrollment in the membership program the default option from January 2012 to at least January 2016.

When shopping online, consumers were offered discounts on their purchases if they enrolled in Adore Me’s VIP membership program. After being deceptively enrolled, consumers were then charged $39.95 a month unless they made a purchase or skipped their monthly purchase by the fifth day of the month. The monthly charges accrued in customer accounts in the form of store credits to be used on future purchases.

Adore Me, acquired by Victoria’s Secret in January, also allegedly made it “extremely difficult” for customers to cancel memberships. The company allegedly limited how consumers could submit cancellation requests, they understaffed their customer service department and forced consumers to go through a long, complicated process to request a cancellation. When consumers successfully canceled their service, they forfeited any accrued store credits.

Another dark pattern implemented by Adore Me was the use of a countdown clock on the company’s website. The countdown clock misled consumers into believing their discounts would expire when the clock reached zero. However, the discounts did not actually expire.

The settlement was negotiated by attorneys general in Pennsylvania, Texas and Washington, D.C.

According to the terms of the settlement, Adore Me must:

• Provide refunds of unused credits to consumers with active VIP memberships
• Pay $2.35 million to the jurisdictions involved in the lawsuit to cover the costs of the investigation or to be used for “future consumer protection purposes”
• Reform its business practices, including making the VIP membership program “opt-in” instead of opt-out,” improving disclosures, and offering an online mechanism for consumers to easily cancel memberships and to request and quickly obtain refunds for recent recurring charges

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.

“Adore Me lured consumers into their VIP Membership Program without being up front about the automatic charges and membership terms,” said Pennsylvania Attorney General Michelle Henry in a June 16, 2023 news release. “It is illegal for companies to subject customers to recurring subscription charges without giving clear notice and a reasonable way to cancel.”

District of Columbia Attorney General Brian L. Schwalb also commented on the settlement.

“Under DC law, consumers are entitled to timely, accurate, and complete information about every purchase they make,” said Attorney General Schwalb in a June 16 statement. “No one should be surprised by a recurring charge or forced to jump through endless hoops to cancel a subscription, yet this is precisely how Adore Me’s business model operated. This investigation and settlement with Adore Me should send a clear message: any company that seeks to profit by tricking or manipulating DC residents will be held accountable.”

The FTC vs. Adore Me

In 2017, the Federal Trade Commission filed a complaint against Adore Me for their negative option tactics. In addition to failing to provide appropriate disclosures, the FTC accused Adore Me of failing to obtain express informed consent from consumers. The case was settled in 2017 for close to $1.4 million. Adore Me did not confirm or deny any of the allegations made in the FTC complaint.

Insider Take

The dark patterns employed by online retailers may have started (and in some cases ended) years ago, but that isn’t stopping states and the FTC from going after them for past misdeeds, and rightly so. It is a shame to see retailers taking advantage of consumers with misleading information or failure to “clearly and conspicuously” disclose material terms of memberships, subscriptions, and discounts related to them. When this happens, it makes consumers wary of other subscription companies, and it makes the entire industry look bad. For those who are following the rules, acting transparently, and acquiring members and subscribers the right way, we applaud you. We hope others will follow your example.

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.