Celebrity lingerie brand, Savage X Fenty has been fined for automatically enrolling customers in the brand's VIP plan, ensnaring them into unwanted monthly charges.
Pop singer Rihanna launched her Savage X Fenty lingerie line in 2018. The company has had its fair share of scandals since the launch from cultural appropriation accusations to the recent announcement that Johnny Depp would be featuring in the company’s newest runway show. This subscription scandal is the most recent and financially damaging with a $1.8 million AUD fine.
In a lawsuit filed by Santa Clara County and four other California local governments, they allege that the lingerie company defrauded customers by automatically enrolling them in the brand’s VIP plan, ensnaring consumers into unwanted monthly charges. California recently tightened up their automatic-renewal law, which Savage X Fenty violated.
The Xtra VIP model costs $49.95 USD a month and is intended for customers to get significant discounts, exclusive sales, styles and more. The Xtra VIP price button was located on an item page, displayed where a normal price button is expected to be. The colourful VIP price was displayed more prominently on the page than the normal price button. If customers clicked it, they would purchase the item with the Xtra VIP discount, therefore enrolling them automatically in the monthly plan.
While customers could skip each month or cancel the membership outright, the sign up is automatic and often catches customers out. Several consumers reported to the Better Business Bureau that they felt like they were enrolled in the program deceptively, and the process to get their memberships canceled was complicated.
The criticism for this started in 2020, only to be resolved this week. A formal complaint was filed in 2020 against Savage X Fenty and its parent company, TechStyle. TechStyle, the parent company of online retailers such as JustFab, Shoedazzle and Fabletics, all of which also have similar monthly subscription models.
“Consumers have a right to know up front what they are paying for and how often,” said Santa Clara Deputy District Attorney Jennifer Deng said in a statement. “Businesses have a duty to be transparent about their automatic renewal charges.”
According to the statement, Savage X Fenty has since “cooperated with the investigation and has made changes to its website, automatic renewal notices, and its store credit and advertising practices.”
In Australia, under Australian Consumer Law, It is illegal for a business to engage in conduct that misleads or deceives or is likely to mislead or deceive consumers or other businesses. This law applies even if you did not intend to mislead or deceive anyone or no one has suffered any loss or damage as a result of your conduct.
The e-commerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!