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

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

#321

Post by sudonim »

akrymski wrote: post #245

Just Wow, what a clever scam. Hardest thing must have been getting a merchant account for this - does anyone know who provides them with a merchant account / credit card processing? And how do they manage to tolerate the chargeback rate without being shut down by Visa etc? Lots of these operations around, but usually remain small due to credit card companies shutting them down quickly. JustFab has been around for a c…

My girlfriend's sister got bitten by the Justfab scam. Apparently when she called to cancel, they refunded her easily. That's probably how they manage chargebacks. If people are pissed enough to call, don't make it so hard they do a chargeback.

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

#322

Post by canvia »

rschmitty wrote: post #310
bitJericho wrote: post #253

Earlier quoted context omitted.

And that's why you shouldn't bank at Wells Fargo.

WF is fine, its just that parent thought his WF Visa was the same thing as an actual Visa that comes with actual protection Remember, never use debit cards.

A locally based credit union will provide better and more flexible support than any big chain bank. Plus you get to use any credit union ATM anywhere (there's a CO-OP network ATM in every 7-11) for free, and most refund some amount of ATM fees every month.

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

#323

Post by jonnathanson »

revelation wrote: post #315
bowlofpetunias wrote: post #302

Earlier quoted context omitted.

What they are doing in fact is illegal in most countries with strong consumer protection. Explicit and informed consent is not something judges and regulators take lightly. And since they apparently operate in Germany, France and Spain, I strongly suspect they are breaking the law in one if not all of those countries.

A law has actually been passed in Germany to curtail these 'subscription services': https://blog.avast.com/2012/04/17/here-comes-the-zahlungspfl...

Correct, and indeed, this business model is nothing new or unusual in the EU in general, or in Germany in particular. Back in the early, pre-smartphone days of mobile, a lot of European companies made fortunes by selling ringtones through a misleading subscription model similar to JustFab's. Their success soon led to a lot of imitators in the US market.

Remember those "Text 53646 to this number to get your NSync ringtone!!!" ads that used to blanket the airwaves? Texting that number got you your ringtone; it also got you $20/month in recurring fees that you were unaware of, because you were a kid, and kids usually don't read their own bills.

There may be nothing technically "illegal" about this dark pattern in the US, but the pattern is pretty fucking dark. And it's usually self-defeating in the long run. Many of the fly-by-night ringtone peddlers of the early 2000s had to flee one country after the next, always on the hunt for new suckers in new territories, always getting chased out of town by an angry mob of pissed-off customers.

This model is not sustainable. Though it's not a pyramid scheme, it shares a similar need for a fresh supply of new victims at a rate fast enough to make up for churn. Churn starts to reach critical mass at some point, forcing the company to expand into a new country altogether.

Then again, sometimes the model just works. Look at GoDaddy. As far as I can tell, they make a shit-ton of money by making it as hard as humanly possible to break subscriptions and hidden upsells, and sadly, they're still around.

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

#324

Post by ada1981 »

jdh wrote: post #42
karterk wrote: post #29

Earlier quoted context omitted.

Not the OP - but I did take a look at that page, and I do find it misleading. The "checkout as a regular member" is in a small font on the sidebar, while the main CTA is big, bold and defaults to the VIP program. The part where you're told about the monthly fee is in the last sentence of the sidebar. I had to practically hunt it to find it - for most people shopping online this will be oblivious. By giving the screen…

I don't accept the word "misleading" -- I do not believe the page in any way misleads. It does not try to position it as anything other than a subscription, and the language is plain english. Could they put the subscription details in bold? Could they use a larger font than all the other text? Sure. It's a tradeoff, for sure, and every retailer has to optimize their site to perform. Could they pop up three boxes afte…

This is a case of "just because you say something enough times, it doesn't make it true". Homie, I'm pretty certain that simply because people don't opt out, it may very well be because they don't realize they are paying for anything.. If the target demo is women who shop alot online, perhaps the charge gets lost in the bill (many people don't review their bills monthly). Is this smart? No. But it doesn't mean it's ok to exploit it. Trivializing the complaints to "they could make it bolder or add a triple pop-up"'is a real straw man attempt here... Of course, whenever we make a decision we will try to justify it - I'm sure you think you are a good guy and that so is your firm and so are your buddies.. so how COULD this be an unethical company? You say HN isn't the target demo - someone with a high buying temp for a good deal on shoes and not tech savvy -- and if hackers and developers and entrepreneurs are unclear on the offer, you think a 35 yr old mom buying shoes is going to "get" the offer more?

You want to prove the community wrong? Split test some traffic. Hell, put an exit popup that says "Before reading this, did you realize you just signed up for a monthly subscription site? Are you happy about that?" Do it with a 3rd party firm and track the results. Your personal reputation and your firms are on the line here, you may want to take it more seriously.

NOTE TO HN: greying out the down voted post in this context isn't useful - perhaps make it red or something? As this is the VC, his bs comments are actually interesting to read. Or maybe there is a setting to change that on my profile (hint, you could bury a $40 / month recurring charge inside changing my color prefs!)

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

#325

Post by ds_ »

ds_ wrote: post #152

Amazon do basically the same thing with their prime membership, although they do refund if you notice and complain early enough (offer a free month and then start charging unless you opt out, whilst making it far from obvious that you have to do so).

There was already a refund request process in place, preempting the inevitable complaints. They knew they were misleading people so they could make money on the back of those that aren't too attentive to their bank statements. I suppose everyone down-voting me thinks that's just great?

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

#326

Post by tripzilch »

jdh wrote: post #23

I'm the Series A investor in this company. We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company. In fact, the company has very high customer satisfaction ratings, including an NPS that is in the ballpark of Amazon, and a very high customer retention rate. More than half of the people who subscribe to the service are still subscribers after two years, which is unusuall…

> We in fact have done plenty of due diligence, and you will be pleased to know it is not a scam company.

I don't think anyone is pleased to know that you believe this is to a scam company.

> I just went to the site -- you can do this -- picked a random pair of boots and put them in my shopping cart. I then clicked checkout, and here is what that page looked like:

> http://imagesup.net/?di=15138026329215

Yup, that's misleading.

> Seems pretty clear to me. You can get the boots for $39 if you join the VIP program. "With this purchase, you will be activating your VIP membership"

Yep it's pretty clear to me, there's a pair of boots in the shopping cart and you can continue to checkout.

> It's in plain English, and in the same font size as everything else on the page.

Fontsize schmontize. The checkout button is bigger.

The "checkout with no monthly fee" not-really-a-button is both smaller and misleadingly labeled.

It's also in muted colours, and it is very purposefully placed AFTER the big bright pink checkout button.

In the sidebar, where you normally place information that leads away from the current task (reviews, 'recommended items', advertisements, etc).

YOU are being very dishonest if you claim the above is not purposefully misleading.

Is there ANY reason why these terms are not in between the shopping cart and the checkout button? Any reason except tricking people into missing this rather important bit of info?

Because all other websites that actually want you to read those terms do so. They even make you check a checkbox to pull your attention to it.

You know why other websites do that (oh yes you do), it's because they don't want to trick their customers.

The fact that you're defending this and feigning ignorance makes you quite scummy as well.

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

#327

Post by arbuge »

ghshephard wrote: post #228
abalone wrote: post #154

Every single person who has been misled into signing up for a recurring charge should do this one thing: Dispute the charge with their credit card company. You'll get your money back and it will issue a bunch of chargebacks to JustFab, which will penalize them financially. If enough people complain their penalties will escalate and their credit card processing rates will go through the roof. This is how the credit ca…

Totally not the case that you get your money back, at least with WellsFargo Visa, they will investigate to determine whether your card was used by some other party. Saying, "I didn't read the terms of the agreement" is not grounds for a chargeback. What's worse is when you've signed up for a One year recurring payment and you have to jump through hoops to cancel such as a registered letter to cancel. Wells fargo will…

Chase is also being a hard ass about charge backs these days...

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

#328

Post by alan_cx »

grey-area wrote: post #103
jdh wrote: post #42

Earlier quoted context omitted.

I don't accept the word "misleading" -- I do not believe the page in any way misleads. It does not try to position it as anything other than a subscription, and the language is plain english. Could they put the subscription details in bold? Could they use a larger font than all the other text? Sure. It's a tradeoff, for sure, and every retailer has to optimize their site to perform. Could they pop up three boxes afte…

You shouldn't have been downvoted here, but the mob has been angered! I'd encourage you to ignore the insults and consider carefully the other feedback - there are some good points made here by people coming to the pages for the first time. Re your point above, What they could do which is very simple is to change the button text to 'Subscribe'. If you'd be reluctant to do that, ask yourself why that is? Why can't you…

If the German site is different because Germans have laws to protect consumers, it kinda give the scam away. All that regional sites could easily be the same, but there there are less or no laws, the scamming continues.

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

#329

Post by ImprovedSilence »

belorn wrote: post #282
brador wrote: post #88

Earlier quoted context omitted.

Just a reminder folks, don't downvote just because you don't agree with what's being said. Do downvote meaningless comments and clear spam.

http://jacquesmattheij.com/The+Unofficial+HN+FAQ#downvoted being factually wrong in the face of this many comments will invite my downvote. > "It does not try to position it as anything other than a subscription, and the language is plain english." In my opinion, that is simply factually wrong.

+1 for the link, but...

>> In my opinion, that is simply factually wrong

oh the irony in that sentence...

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

#330

Post by GrinningFool »

cs702 wrote: post #278

JustFab is not a 'scam company' (in the sense that they may not be doing anything technically illegal), but they are using DARK DESIGN PATTERNS[1] to trick at least some people into doing things they don't want to do. The checkout page[2], in particular, seems designed specifically to trick people into signing up for recurring monthly charges. Any person who adds merchandise to the cart and then clicks the big 'Conti…

It seems to me that calling scam behavior a "dark design pattern" just serves to legitimize it.
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