Coalition of Attorneys General Secure Settlement with Online Retailer for Deceptive Advertising and Billing Practices

Attorney General Charity Clark today announced a multistate settlement with TFG Holding, Inc., an online clothing retailer that offers shoes, clothing, and accessories across several different brands, including JustFab, ShoeDazzle, and FabKids. The settlement resolves claims that the company deceptively marketed its VIP Membership Program to consumers and then made it difficult for consumers to cancel their memberships.

In addition to paying eligible consumers restitution, the company must pay a total of $1 million to the states involved in the investigation to cover the costs of investigation or to be used for future consumer protection purposes. Vermont will receive $15,000 as its portion of the settlement.

The settlement alleges that TFG Holding, Inc. violated state consumer protection laws in multiple ways, including by :

• Misrepresenting the price consumers could expect to pay for products advertised on the company's websites;
• Automatically enrolling consumers, without their consent, into a Membership Program that included a recurring charge without consumers' knowledge, consent, or authorization ;
• Implementing and maintaining cancellation policies and practices that frustrated consumers' ability to cancel the VIP Membership Programs into which they were enrolled; and
• Failing to adequately disclose material facts to consumers, including that by purchasing products they will be enrolled in the VIP Membership Program.

Under the terms of the settlement, TFG Holding, Inc. is required to:

• Clearly and conspicuously disclose the terms of its VIP Membership Program, including the fact that consumers will be enrolled in the VIP Membership Program, the amount and frequency of all applicable recurring charges, and the consumers' right to cancel;
• Refrain from representing its offers or sales of its products as time sensitive, when they are not;
• Provide a simple online mechanism for consumers to cancel their VIP Membership Program;
• Promptly honor consumer cancellation requests and cease any further billing ;
• Provide all consumers the opportunity to request and obtain a refund of any recurring charge balance accrued within the preceding year; and
• Cease the billing of recurring charges to any consumer who enrolled in the VIP Membership Program prior to May 31, 2016, unless the consumer previously skipped a payment, redeemed a credit, received a refund, or made an additional purchase.

As part of the settlement, the company will also be required to:

• Provide automatic restitution to all consumers who enrolled in a VIP Membership Program prior to May 31, 2016, and only made an initial purchase but no subsequent purchases and never skipped a payment;
• Pay restitution to consumers who have an existing eligible complaint against the company that has not been resolved, and to consumers who file a new eligible written complaint with the company or the Attorney General's office within 90 days of the Effective Date of the settlement; and
• Pay a total of $1 million to the jurisdictions involved in the investigation to cover the costs of investigation or to be used for future consumer protection purposes.

In addition to Vermont, the settlement was negotiated by the District Columbia, Pennsylvania, Maryland and Texas, and was joined by Alabama, Arkansas, Connecticut, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, North Carolina, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Washington, and Wisconsin. A copy of the settlement document is available on our website.

Consumers with questions about restitution from this settlement may contact the Vermont Consumer Assistance Program at 800-649-2424 or [email protected].

CONTACT: Amelia Vath, Senior Advisor to the Attorney General, 802-828-3171