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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?

#131

Post by tzs »

tisme wrote: post #9

Don't ask for a refund, go to your bank or CC company and charge back the 6 months. That'll hit them where it hurts. Little known fact about chargebacks: the merchant pays an administration fee, typically $20 to $50. Per charge! That is why the smarter scammers refund to everybody who complains, not refunding is plain dumb. This scam has been around for a long time, usually it's adult companies that sell you a 'free'…

However, be careful and only do a chargeback when you are sure you never want to deal with that merchant again. Many will blacklist you if you do a chargeback, because of that high chargeback fee (which they have to pay even if they have sufficient documentation to successfully fight the chargeback).

I'm kind of surprised no one has started a service for merchants to warn them of chargeback prone customers (there are people who go straight for the chargeback without even trying for a refund first).

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

#132

Post by columbo »

true_religion wrote: post #126
chinmoy wrote: post #106

Earlier quoted context omitted.

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.

Well all their copy tells me that they're a personalized "boutique" aka personal shopper who chooses items for you based on your style. I'd expect that to be a re-occurring cost. I suppose it may be out of the norm of some people, especially the HN crowd, but this kind of thing isn't really unusual. Brick and mortar stores have VIP programs all the time.

> Brick and mortar stores have VIP programs all the time.

Yes. But you can also show up and buy a pair of shoes. I don't believe what you are describing is a fair analogy.

When I order a pair of shoes I expect a pair of shoes. I don't expect a hat, jacket, or a personalized VIP shopper.

On this website if I pretend to order a pair of shoes there isn't anything to indicate (aside from the fine print) that I'll be receiving more than a pair of shoes.

I'd expect this place to suffer a pretty serious class-action lawsuit soon. If I was an investor I'd run as far away as possible.

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

#133

Post by tisme »

tzs wrote: post #131
tisme wrote: post #9

Don't ask for a refund, go to your bank or CC company and charge back the 6 months. That'll hit them where it hurts. Little known fact about chargebacks: the merchant pays an administration fee, typically $20 to $50. Per charge! That is why the smarter scammers refund to everybody who complains, not refunding is plain dumb. This scam has been around for a long time, usually it's adult companies that sell you a 'free'…

However, be careful and only do a chargeback when you are sure you never want to deal with that merchant again. Many will blacklist you if you do a chargeback, because of that high chargeback fee (which they have to pay even if they have sufficient documentation to successfully fight the chargeback). I'm kind of surprised no one has started a service for merchants to warn them of chargeback prone customers (there are…

> I'm kind of surprised no one has started a service for merchants to warn them of chargeback prone customers (there are people who go straight for the chargeback without even trying for a refund first).

There are plenty of such services. You don't see them because they don't normally operate on the merchant level, they operate on the IPSP / processor / card company level.

The reason why they don't usually operate on the merchant level is because that would allow a merchant to pollute the pool with their 'known good' cards to stop people from buying a product with competitors. You have to wonder when you buy this information as a merchant whether it is clean or not. But when an IPSP / processor or card company uses their aggregate knowledge then it starts to be really useful.

You can do AVR checks and so on all by yourself as a merchant but most if not all reputable IPSPs will have an anti-fraud system in place that does all kinds of checks.

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

#134

Post by tlogan »

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 wonder how this company (and these kind of companies) can keep their merchant account open for so long. There has to be some trick here.

For example, maybe they keep enough to funds for last 6 months of chargebacks and have some special kick-back to bank? Or maybe the game plan is to always open a new merchant account after the first one is closed? Or maybe the bar is so low and they never need to worry to lose their merchant account?

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

#135

Post by rory096 »

pbreit wrote: post #56
ricardobeat wrote: post #34

Earlier quoted context omitted.

Maybe I'm being too permissive, but that screen doesn't look fishy at all. I went through the purchasing/sign-up process, and it goes like this: 1. create a profile (answer questions on style) 2. fill in details, click a *JOIN NOW* button 3. get a "*first month* for 50% off" offer 4. get to this payment screen At no point it implies you are buying a single product, there are no "buy now" buttons or calls to action. T…

But its not like any other subscription sites I'm aware of. The huge differences is that you have to visit the site each month or you'll be billed and receive NO product. I was prepared to disagree with OP but the model does seem a little customer-hostile.

The grandparent's link says "Each credit can be redeemed for any JustFab style on the site."

Seems to me that they're saying if you're a member but didn't make your decision for your free (sunk cost) product by the 6th, they charge you and turn it into store credit. It's not like they're charging you and saying "too bad, you don't get anything."

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

#137

Post by khangtoh »

This is the way most vertical ecommerce startups are operating. My friend just got a charge from a site that she bought a promotional item and turns out they're a subscriptiOn service and if you didn't sign in and check skip this month, they'll bill you without shipping you an actual good.

Which also brings up a thought, remember that there was a used one credit card number thing a whole back, I'm betting this will get popular soon enough with all these things happening.

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

#138

Post by RealGeek »

brador wrote: post #120
vog wrote: post #28

Earlier quoted context omitted.

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…

Simple solution is check your CC statements regularly for discrepencies and request a chargeback from your card provider if you get scammed. Enough charge backs and they lose their merchant account. Most Credit cards users don't realize just how simple it is to run a charge back. It is literally one short phone call.

There are plenty of offshore credit card processing companies & banks who provide "high risk billing" solutions for scammy businesses like this one.

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

#139

Post by tripzilch »

pbreit wrote: post #56
ricardobeat wrote: post #34

Earlier quoted context omitted.

Maybe I'm being too permissive, but that screen doesn't look fishy at all. I went through the purchasing/sign-up process, and it goes like this: 1. create a profile (answer questions on style) 2. fill in details, click a *JOIN NOW* button 3. get a "*first month* for 50% off" offer 4. get to this payment screen At no point it implies you are buying a single product, there are no "buy now" buttons or calls to action. T…

But its not like any other subscription sites I'm aware of. The huge differences is that you have to visit the site each month or you'll be billed and receive NO product. I was prepared to disagree with OP but the model does seem a little customer-hostile.

> or you'll be billed and receive NO product.

Actually it says you'll be billed for a "Member Credit", which "can be redeemed for any JustFab style on the site".

I'm not sure what that means exactly, but if you can actually redeem one of those credits for $39.95 worth of product, then 1. it's still very misleading because you spent a lot more money in their store, on their products than you intended to, but 2. at least your money didn't just evaporate, except 3. is there anything preventing them from at some point deciding "From now on, we will only sell novelty dish-washing sponges, at the great rate of one credit per sponge!", making all out-standing credits worthless in a single TOS change?

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

#140

Post by tisme »

kylebrown wrote: post #117
tisme wrote: post #9

Don't ask for a refund, go to your bank or CC company and charge back the 6 months. That'll hit them where it hurts. Little known fact about chargebacks: the merchant pays an administration fee, typically $20 to $50. Per charge! That is why the smarter scammers refund to everybody who complains, not refunding is plain dumb. This scam has been around for a long time, usually it's adult companies that sell you a 'free'…

Banks and, at least VISA, are not as quick to do chargebacks they used to be. Now, they'll only do them if the customer says their card was stolen. Found this out when my mother was scammed by a moving company for the 50% deposit (company never showed). She called the number on the back of the card to dispute the charges (I believe its the bank's customer service number, not VISA's). But the bank told her they couldn…

There is a huge difference between a card present, authorized charge and a card-not-present unauthorized rebill.
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