Rihanna’s Savage X Fenty will 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.”
In a statement announcing the settlement this week, which will see Savage X Fenty pay $1 million in civil penalties, $50,000 in investigative costs, and $150,000 in restitution, Santa Clara Deputy District Attorney Jennifer Deng said, “Consumers have a right to know up front what they are paying for and how often. Businesses have a duty to be transparent about their automatic renewal charges.” Collectively, the various offices note that in accordance with California law, “Online businesses that market to consumers need to disclose all automatic renewal charges ‘clearly and conspicuously,’ whether it is part of a subscription, membership, or other recurring fee.”
As part of the settlement, Savage X Fenty has “made changes to its website, automatic renewal notices, and its store credit and advertising practices.”
An Earlier Investigation
The settlement comes a couple of years after advertising watchdog TINA.org initiated an investigation into the marketing of Savage X Fenty’s membership program, alleging that it found that the company was violating U.S. federal law. According to formal complaints that it filed with the Federal Trade Commission (“FTC”) and Santa Cruz County District Attorney’s Office, respectively, Connecticut-based TINA.org argued back in February 2020 that TechStyle, Inc. – which Rihanna maintains a joint venture with to manufacture/market the $150 million-plus Savage X Fenty brand – was in breach of a 2014 settlement it entered into after being sued by the state of California for allegedly misleading customers about automatic monthly payments charged to their credit cards in connection with its JustFab.com, Fabkids.com, Shoedazzle.com and Fabletics.com businesses.
In furtherance of that settlement, TechStyle agreed to pay $1.8 million and refrain from “making untrue or misleading statements about products or services; deceptively marketing product prices and discounts that are only available to consumers who are bound by the company’s VIP membership without clearly and conspicuously disclosing this fact; and failing to provide a timely cancelation mechanism,” among other things. Fast forward 5 years, and TINA.org claimed that TechStyle was using the same tactics to bolster the wildly successful Savage X Fenty venture.
In addition to allegedly “promoting prices and sales that are only available to consumers who are bound to the company’s Xtra VIP Membership” without clearly disclosing that fact, and misleading consumers about how/when they can use their “unused store credits,” TINA.org claimed that one of the most striking behaviors of TechStyle came in the form of its alleged “enrolling of consumers into … the Xtra VIP Membership without clearly and conspicuously disclosing all the material terms and conditions.” It allegedly did this by “automatically add[ing] (without a consumer’s affirmative consent) a ‘Savage X Monthly Membership’ to the Shopping Bag without showing any price associated with that membership and displays a discount price for the item(s) in the bag.”
Because TechStyle was only providing consumers with a “summary of the Xtra VIP Membership terms at the end of the order process (with different terminology than that used in the Shopping Bag throughout the check-out process),” consumers have been misled. And once an individual is a Savage X Fenty member, TechStyle “employs dissuasion and diversion tactics so that consumers encounter unnecessary difficulty when trying to cancel their memberships.”
With the foregoing in mind, TINA.org claimed that TechStyle was not only violating its 2014 settlement (which is legally binding), it was running afoul of the FTC Act and the Restore Online Shoppers Confidence Act, a federal law that prohibits sellers from “charging any financial account in an Internet transaction unless it has disclosed clearly all material terms of the transaction and obtained the consumer’s express informed consent to the charge.” As such, the ad watchdog asked the FTC “to commence an investigation of the claims being made by Savage X Fenty, as well as the illegal business practices being employed by [TechStyle], and take appropriate enforcement action,” and also urged the Santa Cruz County District Attorney’s Office, which investigated TechStyle in 2014 (thereby, resulting in the lawsuit and settlement), to “re-open its investigation” and take any necessary enforcement action.
While the FTC does not appear to have taken action against TechStyle of Savage x Fenty, TINA.org’s urging seem to have prompted additional action by the Santa Cruz County District Attorney’s Office, leading to the recently announced Savage X Fenty settlement.