CNBC investigates online subscription models

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“We are looking into a number of businesses right now in this area,” said James Kohm, assistant director of enforcement at the FTC’s Bureau of Consumer Protection. “It’s an area that’s rife with problems right now.”

The agency says it has settled cases against 12 companies for more than $400 million, with two additional cases pending litigation. The FTC says it cannot comment on companies it is currently investigating.

Lingerie company Adore Me has come under fire by both some of its customers and the FTC for its misleading membership model. CEO Morgan Hermand-Waiche pitched the company on CNBC’s “Power Pitch” almost four years ago as a low-cost, high-quality alternative to more expensive brands in the space such as Victoria’s Secret.

“Adore Me is a new brand of lingerie that holds to one premise: deliver beautiful lingerie for a price and level of service you never expect to be possible,” Hermand-Waiche told CNBC’s panel of business experts.

One “Power Pitch” panelist criticized Adore Me’s subscription model.

“I am not a fan of customers going to the website and being defaulted into a subscription model instead of proactively choosing it,” Alicia Syrett, founder and CEO of Pantegrion Capital, said at the time.

Angry customers told CNBC they unwittingly opted into monthly membership charges after what they thought were one-time purchases, with Adore Me making it extraordinarily difficult for them to opt out.

2018-11-19 12:00:00

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