Restitution for subscribers, hygiene products to benefit homeless
From the Washington State Attorney General webpage: http://www.atg.wa.gov/news/news-releases/seattle-based-julep-beauty-pay-3m-ag-lawsuit-over-deceptive-business-practices
SEATTLE — Washington State Attorney General Bob Ferguson today announced Seattle-based Julep Beauty, Inc. and its owner Jane Park, will pay $3 million for using deceptive “negative option” marketing tactics to lure consumers into signing up for recurring boxes of Julep products, and then making it very difficult to cancel their subscriptions. Today’s announcement covers deceptive practices that occurred between 2012 and 2015.
“It is maddening for consumers to receive products they don’t want but are charged for,” said Ferguson. “That’s a deceptive way to run a business, and I won’t allow a company to get away with it.”
In a statement, Park said, “I want to take this opportunity to acknowledge and take responsibility for Julep’s previous practices that formed the basis of the AG’s lawsuit that was settled and announced today.”
Julep agreed to pay $1.5 million in restitution to affected subscribers, $250,000 in costs and fees, and to provide hygiene products with a retail value of $1 million at no cost to qualified charities and government institutions that serve victims of domestic violence and the homeless and prison populations.
The precise number of consumers affected is unclear, due in part to Julep’s inconsistent record-keeping. Approximately 55,000 customers nationwide canceled these recurring shipments between December 2012 and September 2015.
Another $250,000 in civil penalties will be suspended, provided Julep and Park avoid further violations of the law. The Attorney General also required the company to provide adequate disclosures of the costs and terms of its subscription services going forward, and to employ sufficient customer service staff to handle complaints and cancellations.
Julep designs and produces its own nail polish and other beauty products and aggressively markets them through social media and online advertisements. The company sells primarily through its website. It also distributes products through three Seattle beauty parlors, retailers such as Sephora and Nordstrom, and on TV through QVC.
As a promotion, Julep offers a “free” Welcome Box of Julep’s products. Consumers must provide a credit or debit card in order to pay taxes and shipping fees, but in the time period covered by the AGO lawsuit, the company did not adequately disclose that consumers were also enrolling in a subscription plan. The disclosures regarding the subscription and cancellation terms were buried in web checkout pages that the consumer was unlikely to see.
Many consumers first realized they were obligated to pay for the boxes when an unknown Julep charge showed up on their debit or credit account statements, or when additional, unexpected boxes of products arrived. The most common subscription plans cost consumers either $19.99 or $24.99 per month.
While Julep’s terms stated that consumers may cancel at any time, in practice it was often extremely difficult to do so. Julep did not employ enough customer service representatives to handle the volume of cancelation requests, and some consumers had to call multiple times before a cancellation was honored. A number of consumers continued to be billed after canceling their subscription.
The AGO investigation began after the office received a number of consumer complaints. The case was handled by Assistant Attorneys General Todd Bowers and Joel Delman.
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