New Jersey to receive $187K in $1 million multistate settlement with online retailer over deceptive memberships

TRENTON, N.J. — Attorney General Matthew J. Platkin and the Division of Consumer Affairs on Thursday announced that a multistate coalition has reached a $1 million settlement with TFG Holding, Inc., an online clothing retailer operating several brands including JustFab, ShoeDazzle, and FabKids.

The settlement resolves claims that the company deceptively marketed its VIP Membership Program and made it difficult for consumers to cancel their memberships.

New Jersey’s share of the settlement is $187,205, and 76 consumers in the state are expected to receive an average refund of $2,463, according to the Attorney General’s Office.

“TFG Holding elevated profits above transparency and honesty,” said Attorney General Platkin. “New Jersey consumers deserve to know that the deal they are getting is the deal they were promised and that their trust is not violated in the marketplace.”

“Consumers have the right to know what they are purchasing with their money,” said Elizabeth M. Harris, Acting Director of the Division of Consumer Affairs. “Locking people into monthly payments without their express consent is against New Jersey’s consumer protection laws.”

TFG Holding offered customers discounted prices in exchange for joining its VIP Membership Program. Members were charged $49.95 per month unless, before the sixth day of each month, they made a purchase or logged into their account to “skip” the charge. Monthly charges were added to the customer’s account as store credits for future purchases.

According to investigators, many consumers were unknowingly charged hundreds or even thousands of dollars for membership credits as a result of these practices, which the company has since discontinued.

Under the settlement, TFG will issue automatic refunds to consumers who enrolled in a JustFab, ShoeDazzle, or FabKids membership program prior to May 31, 2016, and who made only an initial purchase without ever logging in to skip a payment.

The settlement alleges that TFG violated consumer protection laws by:

• Misrepresenting product pricing on its websites.
• Automatically enrolling customers into a recurring membership without consent.
• Making it difficult for consumers to cancel their memberships.
• Failing to disclose that buying products would enroll consumers in the VIP program.

Under the agreement, TFG must now:

• Comply with all state and federal consumer protection laws.
• Clearly disclose all terms of its VIP Membership Program, including charges and cancellation rights.
• Obtain express consent from consumers before enrolling them.
• Provide an easy online mechanism to cancel memberships and stop recurring charges.
• Honor all cancellation and refund requests promptly.
• Cease billing recurring charges for consumers who enrolled before May 31, 2016, unless they previously skipped a payment, redeemed a credit, or made another purchase.

The company will also issue automatic restitution to eligible consumers and provide refunds for any unresolved or newly filed complaints within 90 days of the settlement’s effective date.

The settlement was negotiated by the District of Columbia, Pennsylvania, Maryland, and Texas, and joined by New Jersey along with 30 other states, including Alabama, Colorado, Connecticut, Illinois, Massachusetts, Michigan, North Carolina, Ohio, Oregon, Tennessee, Vermont, Washington, and Wisconsin.