Adore Me, the subscription-based lingerie brand known for its selection of “Designer Lingerie For Every Body,” gained widespread praise from the outset thanks to the inclusiveness of its sizing (it stocks bras that range from size 30A to 44G), and the frequency with which it introduced new collections (unlike traditional lingerie brands, which tend to follow the 2-collections per year approach, Adore Me released 30 to 40 piece collections once a month). However, the once-beloved company is now in hot water with the Federal Trade Commission ("FTC") for employing a business model used to deceive consumers.
Following the receipt of a formal complaint from Truth in Advertising Inc., a nonprofit organization "dedicated to empowering consumers to protect themselves against false and deceptive marketing," the FTC initiated a formal investigation and then filed suit against Adore Me in federal court in New York, seeking a permanent injunction and monetary damages. It 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.
The FTC set forth in its complaint that the e-commerce-only brand, which was founded in 2011 by Morgan Hermand-Waiche, ran afoul of federal law by misrepresenting its store credit policy, and suit. In particular, the government agency alleged that AdoreMe boasts a “VIP” membership program that costs $39.95 per month – unless, in the first five days of each month, a member opts to “skip” that month.
The company’s website stated, “If you do not make a purchase or skip the month by the 5th, you’ll be charged a $39.95 store credit that can be used anytime to buy anything on AdoreMe.”
The FTC asserted in its complaint that, despite explicit promises that consumers would be able to use their store credits “anytime,” from at least May 2015 to May 2016, "Adore Me took unused credit amounts away from consumers who cancelled their memberships or initiated chargebacks with financial institutions to dispute their transactions with the company. Despite discontinuing this practice in May 2016, the company has not made full refunds to all affected consumers."
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, per the FTC.
According to a statement released by the FTC on Tuesday, the parties have agreed to settle the matter out of court. In connection with the settlement order, Adore Me is prohibited from making misrepresentations in the sale of any good or service with a negative-option feature, and failing to provide a simple way for consumers to avoid being charged and to immediately stop any recurring charges.
Adore Me is also "barred from representing that any negative-option feature is being offered on a free, trial, no obligation, reduced, or discounted basis, without clearly disclosing costs and how consumers can avoid charges. In addition, the company must promptly send consumers confirmations of their orders with similar disclosures, without any upsells, additional product or service offers, or other advertising or marketing."
"The order also prohibits the company from using customers’ billing information to obtain payments without first obtaining their express informed consent in a manner prescribed in the order."
Finally, the order requires Adore Me to notify and provide refunds of forfeited store credit to eligible customers, and imposes a $1,378,654 judgment that will be used to pay refunds to consumers under the order.
As Bonnie Patten, executive director of Truth In Advertising, Inc. told TFL of the organization's successful bid for FTC action in connection with Adore Me, “TINA.org is pleased that the victims of Adore Me’s forfeiture policy will finally be reimbursed. This settlement should serve as a warning to other subscription services that deceptively lure consumers into negative-option offers."