Negative-option subscriptions aren’t anything new: just ask any former member of Columbia House. Subscribers sign up for a service, and then receive something every month unless they specifically opt out. It’s become a popular model in fashion recently, and that includes the cosmetics subscription box from Julep, a company probably best known for its nail polishes. Today, the state of Washington announced that the company settled charges that its negative-option marketing for cosmetics boxes was deceptive.
On Consumerist, it’s best known for its sunscreen lipsticks with a short shelf life. Before that, the Washington state Attorney General alleged that Julep was a company that kept haphazard records and marketed its subscriptions deceptively.
While Julep still sells subscription boxes, it has changed its marketing since this suit was filed. The lawsuit covers the period from September 2012 to September 2015.
The previous marketing promised prospective subscribers a box of beauty products for free if they paid tax and shipping, but did not make it clear that buying this box committed you to an indefinite subscription to the company’s “Maven” program, with most plans costing $20-25 per month. New subscribers who tried to quit the service complained to the Attorney General that the company made it difficult to do so.
“Defendants’ ads and marketing that directed consumers to its web checkout page progression associated with the Maven Plan did not contain any information indicating to consumers that the ‘FREE’ gift or Welcome Box were part of a negative option subscription program,” the AG’s office noted in its initial complaint against the company [PDF].
Here’s the breakdown, according to the consent decree [PDF]: the company will pay a total of $1.5 million to “affected subscribers,” which could be people who subscribed during the period in question, or people who canceled or tried to cancel their subscriptions. (Full disclosure: I subscribed at the end of the affected period, but didn’t attempt to cancel.)
The company has to donate merchandise with a retail value of $1 million to charities serving survivors of domestic abuse and people who are homeless or in prison. The products have to go to “qualified charities” serving these groups, and can only include sunscreen, nail clippers, nail files, hygiene products, toiletries, shampoo, conditioner, soap, and manicure kits.
The remaining $500,000 is $250,000 in civil penalties and legal costs paid to the government, and another $250,000 in civil penalties that Julep will not have to pay unless it breaks the law again.
CONSENT DECREE [PDF]
by Laura Northrup via Consumerist
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