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Why can a scam company raise $40 Million Series C + $76 Million Series B?

news.ycombinator.com

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Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#11

Post by wenxun »

yashg wrote: post #4

I think it is definitely fraudulent on the website's part, but I am intrigued by the fact that you girlfriend did not notice the charge on her card for 8 months? May be she was away from her home and busy with her studies but didn't keep a tab on her finances? Where the money is coming and where it is going? Didn't she get her credit card statement in email or she can't see it online on her card issuer's website? I r…

The credit card was issued by China Construction Bank. China's financial & banking system is not as advanced as the US, many Chinese people don't use online banking at all.

Her father was the main card holder, and she was using the second card, her father paid the bills every month as soon as he received the paper statement, he didn't notice anything suspicious.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#12

Post by drakaal »

potatolicious wrote: post #10
drakaal wrote: post #3

Most of you are too young to remember, "Buy now and we'll send you CD's each month for just $9.95 per month, keep only the ones you want, cancel anytime" This is the same thing. It may feel scuzzy, but they do tell you this up front, and while they hope you forget, it isn't a scam, it is just preying on the uninformed.

Whether or not this is a scam is unclear and dependent upon how clearly they tell you this upfront. We've seen enough evil UIs to know that there are many, many ways to hide this information such that a reasonable person would miss it.

I just went through it, on the buy page it says

"To become a JustFab VIP Member, simply purchase any JustFab item on this Site and you will be automatically enrolled in the JustFab VIP Membership Program (including the monthly, automatic purchase feature). As a JustFab VIP Member, our experts will send you a customized selection of JustFab items on the 1st day of every month. You will also receive emails, newsletters, special offers and other updates to maximize your shopping experience."

That is pretty clear to me.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#13

Post by cortfm »

Heh, yeah. There's a class action against them filed in 2011, though not being a part of it I haven't heard anything since.

I wonder sometimes if the corporate shield isn't too strong -- that is, if someone (say, Adam Goldenberg or Don Ressler, the co-CEOs (that always goes well) of Justfab)) is executive of a company which conducts deceptive practices, why shouldn't they be personally responsible? Where, exactly, do we draw the line? I would argue that once the Notional Reasonable People learn about the fraud, we have not only a responsibility but a duty to admit justice. More specifically -- if you know about this deception, but you do nothing, you are complicit. You are now responsible. It's not a matter of choosing to ignore it -- as a participant in the venture economy, you have an obligation. And it would be entirely legitimate to punish you for failing to live up to it.

Specifically, the executives and funders of the VC companies that invested in JustFab should be held personally accountable. The people who reveal the names and home addresses of the executives of those companies will be fulfilling their obligation and doing the world a service -- permitting these individuals to hide behind layer after layer of legal protection is tantamount to personally committing that fraud. Individuals must fear the punishment for them and their families that comes after the commission or effective endorsement of fraud; they must know that we, the technical community, will not protect their abandonment of ethics.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#15

Post by wenxun »

mrtron wrote: post #7

Clearly indicated on: http://en.wikipedia.org/wiki/JustFab Obviously the VCs did diligence - however they must have considered the shady business as an acceptable risk factor. I think the answer to what you are asking is many businesses start in the grey zone. Recently many folks made huge bank with recurring billing with no notice. Ring tones and internet games both went that path. Justfab seems to be breaking into…

If you look at the edit history of JustFab wiki page, you'll see most of the stuff related to their shady business practice was added after last year's discussion [3]

[3] https://news.ycombinator.com/item?id=4592778

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#16

Post by wildgift »

yashg wrote: post #4

I think it is definitely fraudulent on the website's part, but I am intrigued by the fact that you girlfriend did not notice the charge on her card for 8 months? May be she was away from her home and busy with her studies but didn't keep a tab on her finances? Where the money is coming and where it is going? Didn't she get her credit card statement in email or she can't see it online on her card issuer's website? I r…

What you just did was "blame the victim" and basically green-light the asshole company's behavior.

You're shifting the blame away from the scammers.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#17

Post by pbreit »

It's not quite that bad. The 39.95 ends up being a credit that can be applied to a future purpose. And they are pretty upfront about how it works without one needing to "read the entire 2,500 word" TOS.

I don't love the model but I don't think "scam" or "fraud" is accurate.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#18

Post by wenxun »

drakaal wrote: post #12
potatolicious wrote: post #10

Earlier quoted context omitted.

Whether or not this is a scam is unclear and dependent upon how clearly they tell you this upfront. We've seen enough evil UIs to know that there are many, many ways to hide this information such that a reasonable person would miss it.

I just went through it, on the buy page it says "To become a JustFab VIP Member, simply purchase any JustFab item on this Site and you will be automatically enrolled in the JustFab VIP Membership Program (including the monthly, automatic purchase feature). As a JustFab VIP Member, our experts will send you a customized selection of JustFab items on the 1st day of every month. You will also receive emails, newsletters…

Check their previous checkout page:

https://news.ycombinator.com/item?id=4592827

Maybe they engineered their checkout page to be less deceptive since last year, but the number of victims are still increasing:

http://www.sitejabber.com/reviews/www.justfab.com

http://www.scambook.com/company/view/146/JustFabcom

http://www.consumeraffairs.com/online/justfab.html

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#19

Post by limejuice »

I've never heard of this site before, but looking at their page 'How it works', it seems clear it me it's a shoe-of-the-month club, and works similar to things like Disney Movie club, Harry and David Fruit of the month club, or one of various Book Clubs.

The only scummy part would be if they still charge $39.99/month if you don't cancel / skip / select a shoe, without sending you anything. Compare to Disney Movie of the month club where if you don't make a selection or skip that month, you get sent the "Featured" title for that month. Maybe justfab should send you the shoe of the month if you don't make a selection, or maybe they should send a "beauty gift basket".

Otherwise, it looks legit, if you like this sort of thing.

Re: Why can a scam company raise $40 Million Series C + $76 Million Series B?

#20

Post by wenxun »

pbreit wrote: post #17

It's not quite that bad. The 39.95 ends up being a credit that can be applied to a future purpose. And they are pretty upfront about how it works without one needing to "read the entire 2,500 word" TOS. I don't love the model but I don't think "scam" or "fraud" is accurate.

Check out their previous checkout page:

https://news.ycombinator.com/item?id=4592827

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