JustFab: Silicon Valley Sees a Unicorn, Customers See a Trojan Horse The company's founders have a history of being associated with dubious practices.
By Carly Okyle •
Opinions expressed by Entrepreneur contributors are their own.
JustFab Inc., the Internet retailer of lifestyle fashion and the parent company of brands like Kate Hudson's athleisure line Fabletics and footwear site ShoeDazzle, is on a tear. As of August of last year, the company had a valuation of $1 billion and was projecting sales of $500 million for 2015. The El Segundo, Calif.-based e-tailer also boasts serious star power: Actress Kate Hudson and her brother Oliver are backers, and reality star Kimora Lee Simmons served as the namesake site's creative director until May of this year.
Understandably, Silicon Valley is impressed. Customers, however, are less than pleased.
According to a thorough investigation by BuzzFeed, shoppers filed more than 1,400 complaints with the Better Business Bureau against the site in just under three years, from August 2012 to mid-August 2015. While a company spokesperson told BuzzFeed the number represents only a fraction of a percent of the site's customer base, it's still significant: BuzzFeed points out that it's more than the number of complaints filed in New York City against Time Warner Cable, a company with much more name recognition. In May, JustFab lost its Better Business Bureau accreditation.
Related: Copyright on 'Happy Birthday' Song Ruled Invalid
The duo behind JustFab, Adam Goldenberg and Don Ressler, have been involved in several ventures accused of engaging in dubious practices and false promises. In many cases, customers say they were drawn into using a product via a free trial, though they entered credit-card information to pay for the cost of shipping. Later they found themselves automatically charged for a subscription service that was difficult to cancel. Outlandish claims and knockoff products have also landed the pair in hot water.
Here's a list of some of the brands Goldenberg and Ressler are or were behind that have been accused of deceptive practices. For the whole story, read BuzzFeed reporter Sapna Maheshwari"s full investigation.
1. Fabletics athleisure line
This clothing line -- started by Kate Hudson, who often appears doing yoga poses in ads for the brand -- is leaving customers bent out of shape by its lack of clarity. Not only are buyers unaware that the clothes are part of a monthly subscription (referred to on the site as a VIP Membership), but canceling said subscription can only be done in the first five days of a new month.
Related: After the Settlement: What GM Needs to Do Now
2. ShoeDazzle shoe subscription service
Along with Fabletics, the shoe retail site co-founded by Kim Kardashian and bought by JustFab in 2013, has also been accused of being vague and misleading with its subscription enrollment practices. In October of last year, JustFab paid more than $1.8 million to settle a consumer protection lawsuit in California. The lawsuit includes the umbrella company's other brands: JustFab.com, Fabkids.com and Fabletics.com
3. Sensa diet aid
Set to the tune of "Shake Your Booty," Sensa's jingle was ubiquitous on late-night television a few years ago. The idea was that shaking Sensa powder onto food would cause you to feel fuller when you ate less, leading to effortless weight loss. The FTC found the claims too good to be true, however, and named Goldenberg in a judgment of almost $50 million, of which $27 million was ordered to be paid. It was the second-largest deceptive advertising settlement in FTC history, and the legal troubles involving the now defunct diet aid remain ongoing, BuzzFeed reports.
4. Raw Minerals makeup
Raw Minerals was a makeup brand under the duo's former umbrella company, Intelligent Beauty. You might be confusing the product with the similarly named Bare Minerals, also a makeup product. Bare Escentuals, the parent company behind Bare Minerals, didn't appreciate Raw Minerals using the phrase "Better than Bare" in its advertising and took legal action against Intelligent Beauty, also citing "highly misleading and fraudulent" offers. The two companies settled the lawsuit in 2010.
Related: When the CEO Goes Bad, the Whole Company Needs a Fresh Look
