The FTC recently announced a $1.3 million settlement with online lingerie seller, AdoreMe. The FTC charged AdoreMe with falsely promising consumers who joined AdoreMe’s VIP program that they could use their store credits “anytime.” FTC also charged the company with violating ROSCA by making it unreasonably difficult for consumers to cancel their memberships.
In addition to requiring the company to pay $1.3 million in refunds for consumers, the order requires AdoreMe to clearly disclose key terms of negative options and other offers. For example, if AdoreMe claims that a product sold via negative option is discounted (or free), it must clearly disclose, in close proximity to that claim, the costs, deadlines, and actions required by the negative option program. AdoreMe also must get consumers’ express informed consent before billing them for charges related to any negative option offer, obtaining consent through a checkbox, signature, or similar method placed near disclosures of the costs, deadlines, and actions required by the negative option program, including how consumers can avoid charges.
According to the FTC, “…despite AdoreMe’s express claim that consumers who paid to be in the VIP program could use their store credits “anytime,” the FTC says that at least from May 2015 to May 2016, the company didn’t honor that promise for certain people. The complaint alleges that if consumers cancelled their VIP memberships – or initiated chargebacks with their credit card companies or banks to dispute charges made by AdoreMe – the company cancelled their unused “anytime” store credits. The FTC says that rendered the “anytime” claim deceptive. AdoreMe stopped that practice last year, but didn’t give full refunds to all affected consumers