The National Advertising Division’s (NAD) routine monitoring program recently reviewed certain advertising by JustFab, Inc. for “VIP offers” from its Fabletics activewear line. The inquiry focused on advertisements stating claims like “50% off first item” and “first outfit 75% off + free shipping” as part of a “new member VIP exclusive.” The incentives require participation in the VIP membership program, which requires members to opt-out monthly if they wish to avoid repeated charges from Fabletics.

NAD concluded that the advertising offers the discount on the consumer’s first purchase as an incentive to join the VIP program, however the advertising does not disclose the material terms and conditions of the VIP membership itself, including that the advertising fails to include any disclosure of the “Shop or Skip” requirement where the consumer must make a purchase, or to opt-out by a specific date to avoid monthly charges. NAD held that the advertising was misleading given the absence of clear and conspicuous disclosure of the VIP program’s material terms. It noted that such disclosure must be within the four corners of the advertisement and not require the consumer to search to learn more about the terms of the VIP program.

NAD recommended that 1) Fabletics’ advertisement clearly disclose (in close proximity to the introductory discount offer) the obligation to visit the Fabletics website between the 1st and 5th of the month to “skip the month” if customers don’t wish to be charged, and 2) Fabletics modify its website so the material limitations of the VIP program appear on the same page where discount offers are made.

TIP: As a reminder, if a claim must be qualified to avoid being misleading, such qualification must be clear and conspicuous. Such disclosure should be made within the four corners of the advertisement at issue and should not require consumers to search out material limitations.