SINGAPORE: Online retailer Fashion Interactive has been issued an order by the State Courts to cease unfair trade practices, after it was found to have misled customers into signing up for a recurring subscription on its shoe shopping website myglamorous.sg.
In a media release on Friday (Jan 17), the Competition and Consumer Commission of Singapore (CCCS) said it applied to the State Courts on Nov 28 to obtain an injunction against Fashion Interactive and its director Magaud Olivier Georges Albert, to stop them from engaging in the practice known as "subscription trap".
A subscription trap misleads consumers into signing up for a recurring subscription by giving customers the impression that they are only making a one-off purchase of goods and/or services. If customers do not cancel the subscription, typically within a grace period, they would be liable for recurring charges.
Customers who ordered from myglamorous.sg were automatically enrolled in a VIP membership programme after making a purchase, without their knowledge. Those who did not cancel the subscription were then charged a recurring monthly fee of S$59.95.
The court order “prohibits Fashion Interactive, whether by its directors, agents, employees or otherwise, from misleading consumers into signing up and/or continuing with a subscription service requiring payment or recurring payment,” said CCCS.
It also prohibits Mr Magaud from abetting the retailer in misleading customers into doing the same.
Additionally, the company will have to notify CCCS of any business-related changes, including change of web address or name, and if it establishes a new website or mobile application for consumer transactions.
Magaud must also notify the commission of his employment, directorship and partnership status.
Fashion Interactive is also required to do the following for three years:
- Display the details of the declaration and injunction on the landing page of its website
- Notify customers of the declaration and injunction before entering into a contract
- Include in every invoice or receipt that a declaration and injunction has been granted against the company
DIRECTOR WANTED ADS AND WEBSITE TO FOCUS ON DISCOUNTS, SHOES
Investigations revealed that Fashion Interactive “had not sufficiently disclosed key information to consumers and consumers were misled into purchasing a membership subscription with recurring monthly fees", CCCS said.
Mr Magaud, who directed the design of the advertisements and the website, “wanted the focus to be on the discounts and shoes and not on the membership subscription and its recurring monthly fees”, it added.
“Customers were enticed to click on the ‘shop now’ action button on Fashion Interactive’s advertisements placed on Facebook/GoogleAd by the greatly discounted prices shown,” CCCS said in its news release.
“Throughout the purchase process, there was no notice provided to consumers that they were unable to purchase shoes at the advertised price without first subscribing to Fashion Interactive’s ‘VIP Club’ membership with recurring monthly fees," it added.
This led to customers to believe they were only making a one-off purchase.
A checkbox with an “opt-in” option can be found next to the “place order” button, but CCCS found it failed to adequately inform consumers that they would be consenting to the membership terms and recurring monthly fees.
There was also no mention of the customers agreeing to the subscription and fees in the terms and conditions pop-up box that appears after a customer clicks the “place order” button.
“Customers who proceeded to click the 'I agree' button did not know that they had consented to be charged a recurring monthly fee,” CCCS said.
Additionally, the post-purchase emails sent by Fashion Interactive did not include information on the membership subscription and monthly fees. Invoices or receipts were not sent out to inform customers of the charges.
The Consumers Association of Singapore had earlier intervened to help affected customers get refunds, but continued to receive new complaints about Fashion Interactive.
A consumer advisory was issued in January last year.