7 Things We Learned About The Shady Past And Problematic Business Practices Of JustFab

justfab_headerHave you ever heard of JustFab? They’re a startup worth about $1 billion, and they sell clothes and shoes on a subscription model. They also own similar sites like Fabletics, FabKids, FL2, and Shoedazzle. Its founders, however, have an interesting history: they began as marketers of diet “supplements” and wrinkle creams, and brought the most anti-consumer business practices (mostly, subscriptions that can’t be canceled) from that industry to the selling of shoes and yoga pants.

We had seen complaints about the company in our inbox before, but the names didn’t really register until Buzzfeed’s Sapna Maheshwari looked into the history of JustFab, its business model, its parent company, and its founders. It’s fascinating, and makes subscription clothing services seem even less appealing.

  1. The founders met while working for the original parent company of MySpace, Intermix Media, in the division of the company that actually made money. It sold diet pills and wrinkle creams using “free trials” and recurring subscriptions.
  2. They began their own company after News Corp. acquired MySpace. It evolved into a company called Intelligent Beauty, which sold the diet supplement Sensa, beauty treatment Kronos, and Raw Minerals makeup.
  3. You might recognize the name Sensa from their particularly infuriating commercials… or maybe it was their multimillion-dollar settlement with the Federal Trade Commission for unfounded weight loss claims and misleading endorsements.
  4. They started JustFab, which acquired other similar businesses like FabKids and Shoedazzle. All use a subscription model to sell exclusive clothing: since they control the supply chain, this business model can be lucrative.
  5. The subscription model is the cause of consumer complaints: new customers think they’re getting a deal on some shoes, and don’t realize that they’re signing up for a subscription that will be difficult to cancel. “I thought I was buying ONE pair of shoes. Unbeknownst to me, I was signing up for this VIP ‘club’ that charges me 40 dollars every month,” one Consumerist reader wrote to us about JustFab in 2012, detailing her months-long struggle to cancel the unwanted subscription.
  6. JustFab has received $300 million in investment from venture capital firms in Silicon Valley that helped bring startups that you’ve actually heard of, like Spotify and Dollar Shave Club, into existence.
  7. While the shoes and clothes actually do what they promise, unlike the diet pills and wrinkle creams, the brands all use negative-option marketing, where customers get charged for their “VIP membership” unless they remember to opt out. In theory, you can opt out of a month’s shoes or outfits, but only if you remember to do so in the first five days of the month.

The Dark, Scammy History Of JustFab And Fabletics [Buzzfeed]