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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?

#91
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…

It looks like a class action lawsuit was filed against JustFab. The complaint starts like this:

   "Plaintiff Edna Betances-Harold, on behalf of herself and others similarly situated,
    brings this class action complaint against Defendant Just Fabulous, Inc, based on 
    its practice of deceptively marketing and billing consumers for unauthorized 
    charges relating to its retail website."
Does anyone know how that class action went, or how to find out?

Source: http://www.scambook.com/blog/2011/10/justfab-com-justfabulou...

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

#92
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…

The rule in my book is pretty simple: opt-in is perfectly fine, opt-out is shady at best, and morally wrong. This applies to every service and/or subscription, from mailing lists to purchases.

This case is a clear "opt-out" case. If their offer is good enough, they could just explain why properly and people would opt-in. If they need to resort to this kind of tricks to get people enrolled, their offer is not so good and they are feeding on tricking the customers.

In any case, you should never trust a business resorting to these practices. These people won't have a problem selling your personal data whenever they (legally) have the opportunity, or doing anything even when its harmful for you (so long as it's legal). The parentheses are the differentiating point between "shady" and "scam" businesses.

This doesn't necessarily mean that you shouldn't buy from them occasionally (hello ryanair), but you should take every measure at your hand to avoid it and/or protect yourself from them. This includes using throwaway email addresses, refillable debit cards, etc.

If I happened to be an investor in that company, I would first push for good practices before it's too late. If that fails, I would do anything possible to get my money out of there. Apparently you and others like you do not think the same way, so "shady" business practices won't die. I just hope that your grandma doesn't ever get tricked into losing much because of that, or you will feel really really bad that day.

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

#93
post #42
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…

Oh come on man. This is some serious fucking mental gymnastics.

At the very least there needs to be a checkbox a la "I would like to receive spam" or "I would like to give you $480 per year in addition to the $40 for this pair of boots I want." Maybe even include the monthly price in the cost lineup there, since it's, you know, a major cost?

I don't often wish ill on companies, but I seriously hope that this company gets pummeled into the ground in a massive class action lawsuit, and that every investor that knowingly accepted and rationalized this fraud to themselves loses their investment. This is completely unacceptable behavior.

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

#95
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…

Hi Josh,

it's good of you to step up and have this discussion. It seems that justfab is using a Conversion Rate Optimisation trick that you're either not aware of or that you're deliberately downplaying. Put simply, the UI is set to have VIP membership activation default to ON. Those people who are not paying attention will not read the information in the right hand side bar, will check out and will mistakenly purchase the membership.

The simple way to fix this is to have NO DEFAULT. When a user clicks check out, you should show them a page with both options equally balanced. For example, you could have two radio buttons with neither option preselected. That way the user has to make an explicit decision to choose to become a member or not.

This is your opportunity to put your money where your mouth is. Get the justfab team to redesign it. Make it impossible for users to opt in by mistake. Rely entirely on users making an explicit choice. After all, if you genuinely believe that all of your valued customers opt in to the VIP membership by choice, then this redesign will not have any effect on your revenue.

Ball's in your court. We're all interested to know how you will play this.

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

#96
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…

@jdh - how long it will take you to realize, that the biggest scam they pulled off were those financing rounds? EDIT: Just noticed that you were a round A investor. Good for you then.

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

#97
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…

$100MM+, you should at least expect a proof read page? "with this purchase your are activating your VIP Membership"

(I am just going by the text on the image you have supplied)

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

#98
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…

jdh - is this a scam? http://i.imgur.com/s9bsLzK.png

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

#99
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…

While it might seem pretty clear to you, it isn't clear to most users. There is very little indication that you are getting the boots for $39.95 as a VIP member. In addition there is a SINGLE large action item; "continue checkout." There is a WALL of text to the right, with no real indication you need to read it (the whole "same font size") In addition there is an action item "No thanks" which doesn't even look like something that is actionable. You claim that it is in plain English, but it actually isn't. The plain English says "Continue Checkout." Not "Continue Checkout as a new VIP member" There is an indication you are activating your VIP membership. But this wording is placed as far from the "continue checkout" button as possible. There was a recent article on HN about Dark Patterns http://darkpatterns.org/ and this page uses some of those dark patterns.

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

#100
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…

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:

The reason for the dissonance here is that justfab.com works just like a proper shopping site (in fact very like fab.com), except it's also a subscription site which signs you up for subscriptions. This is a dark pattern which uses user expectations (this is a shopping site), to sign them up for something that very few people want (book clubs for shoes). If lots of people did want this, the site could be far more honest about what it does, but it's telling that it presents itself as a checkout first and a club second (in a sidebar that many won't read), and requires action every month in order to skip a payment. How do you buy the product you're interested in, is that the tiny 'checkout as a regular member' link on the right?

It's entirely up to justfab.com how they present themselves of course, and I do dislike internet mobs piling on to criticise a company, but I thought it might be useful for you to hear the measured reaction of someone coming across the page for the first time:

I'm surprised, having heard of fab.com, that you trade under the name justfab.com - this seems a little shady to me, but perhaps it's just a coincidence - I see that justfabulous (now justfab) actually started first.

Looking at the home, I see no mention of subscriptions or subscribe, even in the small print. If the default experience is a subscription, that should be your big selling point, not something hidden away - this makes me distrust you once I find out what the company does.

I'd never expect to be auto-signed up for a VIP program - if it is a VIP program, how can it add everyone automatically? That is not what VIP means and is misleading - this makes me distrust you.

On the home page, the clearest message is that this gives you recommendations, there is no indication of subscriptions - this makes me distrust you.

On the shopping page, the layout is very confusing if this is a subscription and not a purchase - there should be a clear choice, with equal weight, between buy and subscribe. Text in sidebars won't be read by around half your customers, because usually it's meaningless fluff. Putting a warning in a sidebar suggests to me the company knows exactly what it is doing - this makes me distrust you.

The default should be to buy, not to subscribe, or at the very least there should be an explanation of why you should subscribe beside the buy button - when I find out the default is a subscription but is not presented as such, this makes me distrust the site so much I wouldn't ever shop there.

So this build up of distrust is an accumulation of small fibs or misleading statements which build up until I no longer trust what the site says. Now I'm not the target market for your site, but I find it hard to believe that the lack of mentions of subscriptions is a mistake, or that many other people wouldn't be tricked by it until they had signed up and realised their mistake in the second month.

Folks are right to be skeptical -- a lot of businesses have done this, tried to hide the fact there would be future charges. Does JustFab?

I'm afraid it still does in my opinion, yes.

Your summary above is a great statement of what you think works about the company, and how it all works, but it's at odds with the presentation of the site, which is far from clear or honest. If I hadn't read your statement from going to the home page and shopping pages I wouldn't have understood that subscriptions are the default.

If you don't want the site to have a shady reputation, it needs to be far clearer about what the proposition is to customers. Being completely honest and upfront with customers will lose you some profits in the short term, but make it more likely the site will prosper long term.

Perhaps consider a choice for customers - build up style recommendations and buy a la carte at higher prices OR build up style recommendations and subscribe for lower prices?

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