A Seattle-based company that delivers monthly subscription boxes of makeup and beauty products will pay $3 million for using deceptive marketing tactics to lure customers into signing up for the recurring boxes, according to Washington State Attorney General Bob Ferguson.
- Seattle-based Julep Beauty, Inc. and its owner, Jane Park, will pay $3 million after the Washington State Attorney General lawsuit.
- Julep designs and produces its own nail polish and other beauty products.
- Deceptive practices occurred between 2012 and 2015.
- It was not clear to consumers that they were signing up for a subscription from a “free” promotion.
- There will be restitution for subscribers and hygiene products to benefit the homeless.
Ferguson wrote in a news release that the deceptive tactics stem from Julep offering a “free” welcome box of products to customers.
Consumers provided a credit or debit card in order to pay taxes and shipping fees, but the company did not adequately disclose that consumers were also enrolling in a subscription plan.
The disclosures regarding the subscription and cancellation terms were buried in web checkout pages that the consumer was unlikely to see.
Many consumers first realized they were obligated to pay for the boxes when an unknown Julep charge showed up on their debit or credit card account statements. The most common subscription plans cost consumers either $19.99 or $24.99 per month.
“It is maddening for consumers to receive products they don’t want but are charged for,” said Ferguson in a news release on Tuesday. “That’s a deceptive way to run a business, and I won’t allow a company to get away with it.”
Though customers were able to cancel at any time, Julep did not employ enough customer service representatives to handle the volume of cancellation requests.
Ferguson announced on Tuesday that Julep will pay $1.5 million in restitution to affected subscribers. The company will also provide hygiene products with a retail value of $1 each that serve victims of domestic violence and the homeless and prison populations.
Approximately 55,000 customers nationwide canceled these recurring shipments between December 2012 and September 2015. A news release from the attorney general states the precise number of consumers affected is unclear, due in part to Julep’s inconsistent record-keeping.
Julep aggressively markets them through social media and online advertisements. The company sells primarily through its website but also distributes products through three Seattle beauty parlors and through such retailers as Sephora and Nordstrom.