Legal Insider: Subscription Box Julep Beauty fined by the Washington State Attorney General for its Negative Option Marketing Practices

The Washington State Attorney General’s Office announced September 6th fines for Seattle-based Julep Beauty, Inc. and its owner Jane Park for using negative option

Source: Bigstock

The Washington State Attorney General’s Office announced on September 6th that it entered into a Consent Decree with Seattle-based Julep Beauty, Inc. and its owner Jane Park regarding the company’s allegedly deceptive “negative option” marketing between 2012 and 2015 when selling its box subscription services for beauty products.

According to the Washington State Attorney General press release, Julep’s disclosures regarding the subscription and cancellation terms were buried in web checkout pages that the consumer was unlikely to see. The original complaint filed against Julep also alleged that while Julep’s terms stated that consumers may cancel at any time, in practice it was often extremely difficult to do so.

Julep may not have employed enough customer service representatives to handle the volume of cancellation requests and the complaint alleged that it removed email as a method of cancellation because it believed it made it too easy for consumers to cancel.

Among other actions, Julep agreed to pay $1.5 million in restitution to the affected customers, $250,000 in costs and fees, and to provide hygiene products with a retail value of $250,000 million at no cost to qualified charities and government institutions that serve victims of domestic violence and the homeless and prison populations. 

Insider Take:

The action by the Washington State Attorney General’s Office underscores the growing importance of understanding and adhering to a growing list of state and Federal regulations and enforcement actions regarding subscription, membership, and recurring revenue-based business models.  Therefore, it’s imperative that your business understands and audits its offer pages on a consistent basis for compliance. Small changes in your design and offer flow, as well as the placement of offer copy, how subscribers are being auto-renewed, trial offers, raising pricing and the method and ease of cancellation, are all important to consider. 

Want to understand more on this topic? I am hosting a live online training session, Know the Law: Auto-Renew Subscription Plans & Offers, on September 21, 2016, at 1Pm Eastern. 

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