SmileDirectClub Continued to Charge Tens of Thousands of Consumers Monthly Payments after Filing for Bankruptcy and Abruptly Shutting DownMore Than 28,000 Consumers Nationwide to be Refunded
New York Attorney General Letitia James today recovered $4.8 million for more than 28,000 consumers, including 2,265 New Yorkers, who were improperly charged by the telehealth company SmileDirectClub after it went bankrupt and stopped providing services. SmileDirectClub, a telehealth company that offered dental services, filed for bankruptcy in September 2023, but continued to charge consumers for services even after it abruptly halted its business operations. The Office of the Attorney General (OAG) received complaints from New Yorkers who were still being charged for services they could no longer receive because SmileDirectClub shut down. As a result of today’s agreement, SmileDirectClub’s payment processor will provide refunds or account credit to consumers who were wrongfully charged. All eligible consumers will be contacted by email with details on the refund process.“SmileDirectClub shut its doors for good, but illegally continued to charge New Yorkers for costly dental services,” said Attorney General James. “Dental care is expensive and SmileDirectClub promised customers that they would provide affordable, quality care without the price tag, but instead, they extracted thousands of dollars from hardworking people. Today, we are putting money back into people’s pockets who were cheated and reminding companies that if they prey on New Yorkers, my office will step in to protect consumers.”
SmileDirectClub offered dental services, including aligner treatment to help straighten teeth, through its online platform. The majority of SmileDirectClub’s customers paid for their aligner treatment through its “SmilePay” program, which generally involved a $250 up-front payment, followed by 26 monthly installment payments of approximately $89 per month, for a total of more than $2,500.
In September 2023, SmileDirectClub filed for Chapter 11 bankruptcy, and in December 2023, while tens of thousands of consumers were still receiving aligner treatment, the company announced that it was shutting down its platform, canceling outstanding aligner orders, and ceasing all other business operations effective immediately. Despite SmileDirectClub’s permanent closing, the company’s website continued to misleadingly advise consumers, including those who had not completed their aligner treatment, that they must make any remaining monthly installment payments in full.
The OAG received complaints from consumers who were told to continue paying monthly installments although they could no longer receive any treatment in return. In December 2023, OAG sent a cease-and-desist letter to SmileDirectClub to stop advising consumers to continue making payments since the company was not providing any services. In response to OAG’s letter, SmileDirectClub revised its FAQ page and referred OAG to HPS Investment Partners, the agent of SmileDirectClub’s secured lenders, and Healthcare Finance Direct, SmileDirectClub’s payment processor. HPS and Healthcare Finance Direct cooperated with OAG’s investigation and paused sending former customers of SmileDirectClub to collections.
As a result of today’s agreement, consumers who were improperly charged will receive refunds. A portion of the refunds will be issued automatically. Additional refunds will be issued to consumers who submit an online refund request to Healthcare Finance Direct. Eligible consumers will be contacted by Healthcare Finance Direct by email with information on the automatic refunds and how to submit a request for an additional refund. For more information on refunds and eligibility, please visit Healthcare Finance Direct’s FAQ page.
Attorney General James asks any patient who believes they have been a victim of misleading billing practices to file a complaint online or call 1-800-428-9071.
“SmileDirectClub shut its doors for good, but illegally continued to charge New Yorkers for costly dental services,” said Attorney General James. “Dental care is expensive and SmileDirectClub promised customers that they would provide affordable, quality care without the price tag, but instead, they extracted thousands of dollars from hardworking people. Today, we are putting money back into people’s pockets who were cheated and reminding companies that if they prey on New Yorkers, my office will step in to protect consumers.”
SmileDirectClub offered dental services, including aligner treatment to help straighten teeth, through its online platform. The majority of SmileDirectClub’s customers paid for their aligner treatment through its “SmilePay” program, which generally involved a $250 up-front payment, followed by 26 monthly installment payments of approximately $89 per month, for a total of more than $2,500.
In September 2023, SmileDirectClub filed for Chapter 11 bankruptcy, and in December 2023, while tens of thousands of consumers were still receiving aligner treatment, the company announced that it was shutting down its platform, canceling outstanding aligner orders, and ceasing all other business operations effective immediately. Despite SmileDirectClub’s permanent closing, the company’s website continued to misleadingly advise consumers, including those who had not completed their aligner treatment, that they must make any remaining monthly installment payments in full.
The OAG received complaints from consumers who were told to continue paying monthly installments although they could no longer receive any treatment in return. In December 2023, OAG sent a cease-and-desist letter to SmileDirectClub to stop advising consumers to continue making payments since the company was not providing any services. In response to OAG’s letter, SmileDirectClub revised its FAQ page and referred OAG to HPS Investment Partners, the agent of SmileDirectClub’s secured lenders, and Healthcare Finance Direct, SmileDirectClub’s payment processor. HPS and Healthcare Finance Direct cooperated with OAG’s investigation and paused sending former customers of SmileDirectClub to collections.
As a result of today’s agreement, consumers who were improperly charged will receive refunds. A portion of the refunds will be issued automatically. Additional refunds will be issued to consumers who submit an online refund request to Healthcare Finance Direct. Eligible consumers will be contacted by Healthcare Finance Direct by email with information on the automatic refunds and how to submit a request for an additional refund. For more information on refunds and eligibility, please visit Healthcare Finance Direct’s FAQ page.
Attorney General James asks any patient who believes they have been a victim of misleading billing practices to file a complaint online or call 1-800-428-9071.
