AG’s Agreement Follows Separate $1.4 Million Settlement With FTC, Including $125,000 For New Yorkers
Retailer Will Pay Additional $300,000 in Penalties, Fees, and Costs, As Well As Up To $63,000 More in Restitution for NY Consumers
Settlement Requires Company To Reform Its Marketing Practices
Attorney General Eric T. Schneiderman today announced a settlement with lingerie retailer Adore Me, Inc. (“Adore Me”), following an investigation into the company’s business and advertising practices for its VIP Membership Program. The settlement resolves allegations that Adore Me deceptively marketed its VIP Membership Program to consumers for a $39.95 monthly fee—often by failing to adequately disclose the recurring monthly charges to consumers and leading them to believe that they could still use their accumulated store credit when they cancelled the program. In a separate settlement with the Federal Trade Commission (“FTC”), Adore Me agreed to pay $1.4 million in consumer restitution, of which New Yorkers will receive approximately $125,000. The Attorney General’s settlement requires the retailer to pay $300,000 in penalties, fees, and costs, as well as up to $63,000 in restitution to consumers.
“Adore Me misled customers – and we’re holding them to account” said Attorney General Schneiderman. “My office will continue to investigate companies that cheat New Yorkers out of their hard earned money through misleading advertisements.”
Adore Me offers consumers two methods to buy its merchandise: a pay-as-you-go option that does not require any further commitment, and a VIP Membership Program that enrolls consumer in a monthly fee-based program. While Adore Me’s VIP Membership Program offers consumers a discount on their initial purchase of merchandise, as well as discounted prices on future purchases each month, Adore Me charges consumers enrolled in the VIP Membership Program $39.95, unless, within the first five days of the month, the consumer “shops” and purchases merchandise or affirmatively clicks a button to “skip” buying merchandise that month. For those consumers who do not “shop” or “skip” during the required five-day period, Adore Me charges their credit or debit cards $39.95, which is then reflected as a store credit in the consumers’ Adore Me account.
Adore Me marketed its VIP Membership Program to consumers without clearly and conspicuously disclosing the material terms and conditions. In addition, Adore Me told consumers that their store credits could be used at any time. However, until June 2016, Adore Me actually kept all credits of consumers who canceled their VIP Membership and still had store credit remaining in their online accounts at the time they cancelled. In addition, consumers often incurred monthly fees for several months without realizing that they had been enrolled in Adore Me’s VIP Membership Program. Even after consumers noticed these charges on their credit or debit card statements, many consumers experienced difficulties cancelling this fee-based membership program when they contacted Adore Me.
Adore Me recently reached a separate settlement with the Federal Trade Commission (“FTC”) for almost $1.4 million in consumer restitution. Under that settlement, consumers who forfeited store credit between May 1, 2015 and May 19, 2016 will receive a full refund. Under Adore Me’s settlement with the FTC, New York consumers will receive approximately $125,000 in restitution.
In addition to those consumers who will receive restitution pursuant to the FTC’s settlement with Adore Me, the following categories of consumers are eligible to receive restitution under the Attorney General’s settlement:
- New York consumers who currently have store credit in an amount greater than twelve (12) months of VIP Membership Program charges;
- New York consumers who had store credit with Adore Me that they forfeited when they cancelled their VIP Memberships before May 1, 2015 or after May 19, 2016;
- New York consumers who cancelled their VIP Membership Program prior to June 2016 and satisfied certain criteria evidencing that they only spent store credit to avoid forfeiture of those store credits; and
- Any consumers who filed a complaint with the Attorney General’s office between January 1, 2012 and December 31, 2017 stating that they were not aware or did not knowingly consent to being enrolled in the VIP Membership Program.
Under the terms of the settlement, Adore Me is required to notify consumers in writing that they are entitled to a refund. The company will issue refunds to the credit card, debit card, or bank account that consumers used to make their purchases from Adore Me. If, for any reason, the refund does not go through, Adore Me will mail consumers a refund check.
In addition to paying $300,000 in penalties, fees, and costs and up to an additional $63,000 in consumer restitution, Adore Me has agreed to several important reforms of its current business practices. These include:
- Reforming its online marketing practices to ensure consumers understand that they are enrolling in Adore Me’s fee-based VIP Membership Program;
- Obtaining the consumer’s express informed consent prior to billing any consumer for Adore Me’s VIP Membership Program;
- Providing consumers with a simple online mechanism to cancel their VIP Membership and promptly stop billing and collecting monthly payments; and
- Ceasing to charge consumers enrolled in its VIP Membership Program who have accumulated twelve (12) months of store credit.
