ACCC targets Fabletics over “subscription traps”

Internet Retailing

22nd Jun 2016

Fabletics, the US-based exercise clothing retailer co-founded by actress Kate Hudson, has agreed agreed to change its website after the ACCC raised concerns about the ongoing costs of its “VIP” membership program.

Following their first purchase of discounted active wear clothing, Fabletics’ customers were charged a monthly US $49.95 subscription charge for VIP membership. This membership entitled customers to purchase activewear each month using a membership “credit” gained through their monthly payments. The ACCC received complaints that some Fabletics customers were unaware they had signed up to monthly subscription payments, and some had difficulty cancelling their memberships.

Online retailer, Scootprice, has also come under ACCC scrutiny for failing to adequately disclose the fees for its “premium” membership, which ranged from $29.90 per month to $99 per quarter.

The consumer watchdog said it has also received complaints that some Scootprice customers were unaware they had signed up to ongoing subscription payments. Scootprice has since cooperated with the ACCC’s investigation, including by refunding customers who it signed up to its premium membership without being fully aware of the fees payable for this service.

“We are putting online retailers on notice that they must clearly and prominently display any ongoing membership fees and we are warning consumers to look out for them when shopping online,” said Rod Sims, chairman of the ACCC. 

“Issues being encountered by consumers range from lack of disclosure of conditions and monthly payments as with Fabletics and Scootprice, to ‘subscription trap’ conduct by online retailers.

“The ACCC has seen a spike in complaints from unhappy consumers regarding the use of the relatively new ‘subscription trap’ model by online retailers. This involves online retailers treating a consumer’s decision to make a single purchase as consent to signing them up to a paid, ongoing subscription service without adequately disclosing that the subscription service involves ongoing fees,” Sims said.