The Biggest Scam in Online Fashion

It's been a great year for JustFab.com—the "subscription" shoe website just pulled in a $40 million investment, bringing their total VC backing to $149 million. The service boasts millions of users. It was all looking so good—but now the internet is turning on JustFab, claiming it's one big tricky ripoff.

When you go to JustFab.com, there's no hint about how the site really hauls in its money. It just looks like any other shoe store—think Zappos, with a drunk 10th grader sloshing some pink paint around. Beneath the mall-chic facade is the "JustFab VIP Membership Program," a near-compulsory subscription shoppers are pushed into joining upon checkout.

The pitch: you can get a pair of high quality boots for just $40!

The reality: you'll be charged $40 every subsequent month whether you want more boots or not.

This fact is presented to you in the most obscured—you might say deliberately!—manner. The VIP Membership isn't mentioned on the front page, it's not mentioned during sign-up, it's not mentioned when you take a "style quiz"—only when you hit checkout do you have a (slight) chance to read the very fine print.

The Biggest Scam in Online Fashion

See that on the bottom right?

If you do not take action between the 1st and the 5th of the month, you will be charged $39.95 for a member credit on the 6th.

On many computer screens, you'd have to scroll down to see that you're actually buying a $40/month shoe plan, rather than a just a pair of shoes. There's a big difference! This is the same bait and switch maneuver companies have been pulling since CD of The Month clubs in the 90s. Only now, it's 2013, and if you're a technology company, every scam can be born new, wondrous, and lucrative again.

In an odd show of lucidity, the gang at Hacker News is having a very appropriate shit-fit about JustFab's business practices:

I didn't have any direct experience with JustFab. The victim was my girlfriend. Back in January 2012, one of her friends emailed her a link to JustFab, then she bought a pair of shoes from www.justfab.com and never visit the website again. Then 8 months later, in September 2013 she finished her Master study in the US and returned to her home country. She was appalled to find out that her credit card has been charged a $39.95 fee for the last eight months. Yes, $39.95 for 8 months, without getting anything from JustFab.

I then did a bit research on the internet. It turned out my girlfriend wasn't the only victim. Apparently JustFab works like this: once you buy something from their website, you become their "VIP member" without your knowledge. Then you will have to log into their website between the 1st-5th of each month and click “Skip This Month”. If no action is taken (either skip this month, or cancel your account), they just charge you a $39.95 fee every month.

According to article published on BusinessInsider, JustFab "generate about $100 million this year" in sales, I wonder how much of this $100 million are from people like my girlfriend who simply didn't read their entire 2,500 words Terms of Service and were unaware that they were charged $39.95 a month for nothing.

I would wager a significant portion! If it didn't pay to present important information in a confusing manner, it wouldn't be presented in a confusing manner.

One of JustFab's investors, Josh Hannah, replied to the above:

I obviously cannot speak to your girlfriend's experience. With nearly a million subscribers, there are certainly people with bad experiences — same is true with any service. Netflix is great but I am sure there are a number of people who have had a bad experience.

I would encourage the HackerNews community to consider the opposite: if we assume the investors in this business do perform due diligence, is there another possible explanation? Is it possible that this case is not representative of the average case?

But hey, we don't have to be he-said-she-said here, anyone can just go to the site and verify if this claim is true. In essence, the claim is: "The site tricked me. I went to buy a single pair of shoes, and in doing so, they actually started taxing my credit card every month, and no one warned me."

[...]

Under "How VIP Membership Works", it explains: " If you do not take action between the 1st and the 5th of the month, you will be charged $39.95 for a member credit on the 6th. Each credit can be redeemed for 1 JustFab item, so use it to shop later!"

It's in plain English, and in the same font size as everything else on the page. Over 800,000 people can manage their subscription account every month without racking up credits. I'm sorry it didn't work for your girlfriend, and I recognize she is not the only one who has not grokked the subscription element and been surprised — but it's a tiny minority, and the information is quite clear on the site.

Basically, Sorry your girlfriend can't grok, sucker. We'll just have to take his word on the assertion that most people aren't confused by the site's inherently exploitative and confusing business model—Hannah told me that he is in "board meetings all day, so can't do [a] quick turnaround" with regards to all this. An email to JustFab's press center has not been returned.

In the meantime, it's telling that in Germany, where consumer protection laws are stronger, the checkout page looks like this:

The Biggest Scam in Online Fashion

It's made clear that you can either buy just the shoes (and pay more), or participate in the "VIP" program. This should be clear to anyone, particularly a cabal of smart investors who should absolutely know better. But betting on consumer naivety in the presence of internet excess has historically been a good financial move, so maybe, who can really blame them? The rest of the commenters on Hacker News aren't so forgiving:

You're full of shit. JustFab is a shoe of the month club masquerading as a normal online shoe store. The VIP Membership Program is the essence of JustFab's business model and yet it's missing entirely from the home page of their site. It looks like any other shoe store. And yet you think it's clear that the user is being signed up for a shoe of the month membership when they originally clicked through to buy a single pair of shoes.

When a user goes to checkout of any online store, they're not going to read everything on every page. It's a process they're very familiar with so they're going to skim and click through quickly. I know this, you know this, and JustFab knows this. That's why the program details are listed on the first page of the checkout process and not the last. That's why they're listed on a page where the user has but one action to take. Click the big pink button and get on with the checkout process.

Another user adds "I can smell class action against JustFab." But unfortunately, another pertinent bit hidden away in tiny text is that any JustFab user signs away their rights to a class action. But hey, at least the shoes are cheap!