Owner JustFab has faced deceptive marketing accusations before

Sucker Punch

On the surface, it seemed like a good deal. Fabletics, the workout gear line fronted by Kate Hudson, offered customers who joined their VIP program a deep discount on athletic clothing. “First outfit 75% off [and] free shipping!” crowed one such ad.

Unfortunately for members, the offer had significant limits which, according to the National Advertising Division of the Council of Better Business Bureaus, were not well-disclosed. Once enrolled in the program, consumers could indeed secure deep discounts on workout gear–but they were required to do so within the first five days of any given month. They could buy discounted items, or skip the offers for that month, but if they did neither, they would be charged a hefty $49.95, which was credited toward future purchases. The NAD issued the decision as a part of its routine monitoring program.

Consumers had also complained about difficulties extricating themselves from the program once they decided to quit.

Track Record

JustFab, the owner of Fabletics, and Adam Goldenberg, JustFab’s founder, have had their share of run-ins with consumers, regulatory agencies and watchdog groups.

In 2015, the Better Business Bureau revoked JustFab’s accreditation. Just a year earlier, the company settled a misleading advertising lawsuit with the Santa Clara and Santa Cruz district attorney’s offices for hidden subscription fees attached to online discounts. And in 2014, Goldenberg’s Sensa weight loss company paid $26.5 million in a settlement with the FTC, which slapped the company for misleading product claims.

These recent blemishes are only the latest chapters in a long story–Goldenberg and the various companies he has founded or run for more than a decade have long suffered under consumer and regulatory complaints.

The Takeaway

JustFab agreed to adopt the NAD’s recommendations that the company disclose the terms of the VIP program openly in the advertising that offers related discounts. Every online advertiser should follow suit.