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Why was a scam company able to raise $76 Million Series B?

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Re: Why was a scam company able to raise $76 Million Series B?

#101

Post by sltkr »

reitzensteinm wrote: post #7

So I went through their checkout process, and up until the credit card stage there is zero indication that it's a membership site (I read everything on every page). I've uploaded the credit card section here: http://i.imgur.com/3di93.png It says you'll be billed month per month on the right hand side under the VIP membership program, but I think it's pretty clear that the page is engineered to be misleading. It looks…

At least the bullet points on the right clearly describe how the site works. I'm not saying it's not misleading, but I think OP's complaint that customers have to “read their entire 2,500 words Terms of Service” to see what the deal is, is basically wrong.

(Also you don't get “nothing” for $39.95; you get store credit. That sucks if you didn't want any, of course, but given the fact that people actively sign up to be able to purchase from that store, I can't imagine it's entirely worthless.)

Re: Why was a scam company able to raise $76 Million Series B?

#103

Post by ahoyhere »

endianswap wrote: post #83
trimbo wrote: post #73

So basically this is the Columbia House[1] of shoes. That's not a scam, it's "a catch". When a consumer hears the pitch -- in the case of Columbia House, it was "get 8 CDs for 1 penny", in the case of JustFab it's "get any pair of shoes for $39" -- they should be asking what the catch is. An ungodly number of businesses involve catches to survive. How about cell phones? That new iPhone is only $200... but you have a…

The difference, at least from my point of view, is that it is a realistic deal to find a pair of shoes for $39 dollars when I don't think it's reasonable to be able to buy X cds for a penny, for even X=1. The closer you get to the actual or expected value of what you're buying, the more unethical I feel it is, just because you're going to be tricking a greater number of people.

If you bought into Columbia House in the 90s, as I did, the math worked out to ~$10 average for each CD over a year (the 8-for-a-penny plus the full-price ones), back when they were $16 each at the local store.

The promotional offer was an attention-catcher, but you still saved $4-6 per CD.

Just because you feel like "there must be a trick" doesn't mean there is a trick.

Re: Why was a scam company able to raise $76 Million Series B?

#104

Post by rwhitman »

Why wouldn't a scam like that be worth a $76m investment? The business is obviously very lucrative.

If a business is profitable in the hundreds of millions, as long as it is borderline legal, someone will invest in it. Thats the sad reality of how this stuff works.

Though it is disappointing that Business Insider didn't take a few seconds to make an attempt at journalistic integrity, and do some research here rather than once again simply regurgitating a press release as some fluff piece.

Re: Why was a scam company able to raise $76 Million Series B?

#105

Post by revelation »

vog wrote: post #28
reitzensteinm wrote: post #7

So I went through their checkout process, and up until the credit card stage there is zero indication that it's a membership site (I read everything on every page). I've uploaded the credit card section here: http://i.imgur.com/3di93.png It says you'll be billed month per month on the right hand side under the VIP membership program, but I think it's pretty clear that the page is engineered to be misleading. It looks…

I don't know about the US, but here in Germany you can't put that kind of stuff into your terms and conditions. Well, you could, but those terms would be ineffective. Of course, this doesn't help if they succeed to intimidate the victim. But if the victim doesn't pay, there's nothing the scammer can do, because this case would never succeed in court. Having said that, it might help if the victim complains to the poli…

Not only ineffective, but its planned to make this deceipt downright illegal. You have to state all of the costs in clearly readable text on the signup page itself and change the button to indicate that you are signing up with recurring costs.

Re: Why was a scam company able to raise $76 Million Series B?

#106

Post by chinmoy »

true_religion wrote: post #64
chinmoy wrote: post #23

Earlier quoted context omitted.

Thanks for the screenshot. This is outrageous IMO. Few people will notice that the TOS checkbox actually reads "JustFAB VIP membership program". Most people will take it as a normal TOAS checkbox that you have to agree every time you order from any website. So, yes, the page is designed to be misleading a.ka scam some subscription fees.

However the entire right side of the screen is about the VIP program. What exactly could people instead be lured into thinking they're doing here?

Considering the fact that, you end up on the checkout page trying to purchase an item, the jibber-jabber on the right side hardly helps.

Re: Why was a scam company able to raise $76 Million Series B?

#107

Post by ceejayoz »

niggler wrote: post #67
tisme wrote: post #63

Earlier quoted context omitted.

That's nonsense. The only time a chargeback makes sense is after the payment has already gone through.

What the parent meant was "after you paid the bill". It's hard to go back later and say the charge was fraudulent after you received the bill and opted to pay it. In theory, payment = acceptance of charges.

> It's hard to go back later and say the charge was fraudulent after you received the bill and opted to pay it.

Not when it's lumped into a single balance that you pay significant monthly interest on.

Re: Why was a scam company able to raise $76 Million Series B?

#108

Post by kevinalexbrown »

To answer the question at hand: "Why was [this] company able to raise $76 Million Series B?" They make money.

What's more concerning to me is that the coverage in TechCrunch[0] and Business Insider wasn't able to raise a modicum of doubt. If googling "JustFab" returns "Class Action Lawsuit" in the first 5 results, it would seem that the reporters either didn't do the absolute minimum required for effective journalism, ignored it, or were instructed to ignore it.

We've all heard the "online journalism is broken" refrain, so I won't repeat it here.* I'll just note that if it's so far gone that googling the topic of interest is out of the question, this form of journalism is worse than I thought.

[0] http://techcrunch.com/2012/04/26/fashion-retail-and-styling-...

* Edit: some forms appear to be doing quite well, e.g. nytimes.com. I'd also point out that there are some online articles I've found on TC or TheNextWeb, or AllThingsD that were quite good.

Re: Why was a scam company able to raise $76 Million Series B?

#109

Post by chinmoy »

kevinalexbrown wrote: post #108

To answer the question at hand: "Why was [this] company able to raise $76 Million Series B?" They make money. What's more concerning to me is that the coverage in TechCrunch[0] and Business Insider wasn't able to raise a modicum of doubt. If googling "JustFab" returns "Class Action Lawsuit" in the first 5 results, it would seem that the reporters either didn't do the absolute minimum required for effective journalism…

Then again since when TechCrunch really practiced journalism?

Re: Why was a scam company able to raise $76 Million Series B?

#110

Post by nikcub »

It is a Netflix for shoes. The difference is that Netflix do not mention their price without mentioning 'per month', while JustFab never mention it.

I went through the checkout process. If you were introduced to this site as a cheap shoe store, rather than as a 'netflix for shoes', you could easily be mislead.

They are definitely in the grey area.

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