The Australian Competition and Consumer Commission (ACCC) is warning consumers to ensure they check the conditions and fees payable for ongoing membership services in connection with discounted online purchases.
Fabletics, a US-based exercise clothing retailer, has cooperated with the ACCC and agreed to change its website after the ACCC raised concerns about inadequate disclosure of conditions and the ongoing costs of its “VIP” membership program.
Fabletics is co-founded by global movie star Kate Hudson.
Following their first purchase of discounted active wear clothing, Fabletics’ customers were being charged a monthly US $49.95 subscription charge for VIP membership.
This membership entitled customers to purchase active wear 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.
The ACCC was also concerned, following customer complaints, about another online retailer, Scootprice, failing to adequately disclose the fees for its “Premium” membership, which ranged from $29.90 per month to $99 per quarter.
The ACCC 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.
ACCC Chairman Rod Sims said etailers need to ensure consumers are fully informed of fee structures.
“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."
“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.
“The ACCC will continue to monitor any further complaints in relation to these issues and will not hesitate to take appropriate enforcement action against online retailers who attempt to utilise subscription traps in the future.”
Both Fabletics and Scootprice have cooperated with the ACCC by committing that they will make any ongoing membership fees clearer and more prominent in their website communications and throughout the checkout process.