By Arriana McLymore and Katherine Masters

NEW YORK (Reuters) – Inc is not the only US retailer accused of using deceptive tactics to sell memberships to shoppers.

From the big chains Walmart and Best Buy to specialty retailers like Savage X Fenty and Adore Me, retailers’ subscription programs are facing increasing scrutiny.

Many charge buyers monthly fees in exchange for free delivery, unlimited tech support, or merchandise discounts. 30% of Americans were signed up for a subscription service in 2022, according to a survey of 37,720 people by Euromonitor Inc, up from 20% of respondents in 2017.

Amazon is under fire from the US Federal Trade Commission, which filed a lawsuit against it in Seattle. The FTC accused the e-commerce giant of misleading “millions of consumers” into buying subscriptions to Prime services. Prime members in the United States pay $139 per year for free delivery and generate much of Amazon’s sales volume.

For years, Amazon “knowingly complicated the cancellation process for Prime subscribers seeking to cancel their membership,” the FTC said in the complaint. Amazon “substantially revamped its Prime cancellation process” for some customers before the lawsuit was filed, according to the complaint.

Amazon, which launched Prime in 2005 and has about 170 million subscribers in the United States, said it was willing to defend itself in court. Last year, Amazon changed its process for canceling Prime with “two clicks” in Europe to comply with European Union consumer protection rules, and modified the process in the US in early 2023, he said. Both the old and new cancellation processes comply with applicable law, Amazon said.

William Kovacic, a professor at George Washington University Law School and a former FTC commissioner, said Amazon’s lawsuit is a way to “make a point,” change Amazon’s practices, and “develop a template for standards for everything.” the sector”.

Retailers should be “very concerned” that the FTC is taking action against auto-renewal terms, multi-step cancellation policies and other practices that have become widespread on many online subscription platforms, said Kathleen Benway, former head of FTC Office staff. of Consumer Protection.

“This is the first time that a court has looked at the appropriateness of these types of disclosures and other practices that have become quite common now,” he said.


Nonprofit consumer protection organization Truth in Advertising filed a lawsuit in 2020 against Savage X Fenty and its parent company TechStyle, which also owns e-commerce platforms such as JustFab and Fabletics, over the company’s automated enrollment techniques.

The nonprofit said Savage X Fenty lured shoppers to the site with VIP member discounts on lingerie and automatically enrolled them in its membership program without fully disclosing terms and conditions.

Those terms required consumers to opt out of the program to avoid monthly fees. Marketing for Savage X Fenty also informed customers that those charges could be used as purchase credits without telling them that the credits only applied to purchases of $49.95 or more, according to the complaint.

The company later settled with the California state government for $1.2 million. A company spokesperson said that as part of the settlement, he agreed to make changes to the Savage X Fenty website and set aside $140,000 to provide rebates to eligible California consumers.

In 2016, Truth in Advertising filed a lawsuit against Adore Me, then an independent company, over its VIP membership pricing program. The retailer reached a $2.35 million settlement with more than two dozen states for its practices in early June.

Ranjan Roy, Adore Me’s vice president of strategy, said the allegations related to the company’s practices from at least 2012 to 2016, before Victoria’s Secret acquired the retailer.


Walmart started its Walmart+ subscription in 2020 and had 20 million subscribers as of May, according to Morgan Stanley estimates. He charges $98 a year and promises free grocery delivery.

A Michigan shopper alleged in a 2022 lawsuit that Walmart used “deceptive subscription practices,” including automatically charging customers after a Walmart+ free trial, creating obstacles to canceling subscriptions, and failing to honor cancellations after shoppers they opted out, according to the complaint. He withdrew the lawsuit, according to court records.

His attorney, Spencer Sheehan, did not immediately respond to emails and calls for comment. The lawyer previously told a news outlet that the parties “resolved the action to our mutual satisfaction.” Walmart did not immediately comment.

Best Buy in 2021 launched a subscription program that offers technical support and discounts on products. Later this month, it will begin offering two tiers of paid memberships for $49.99/year or $179.99/year.

A buyer filed a class action lawsuit against Best Buy in 2022 after purchasing a TV online, alleging that he was automatically enrolled in two subscription programs: a Total Tech Support Monthly Membership, which costs $19.99 per month, and an antivirus program that it costs $2.99 ​​per month. – Without your knowledge. Best Buy did not include an option to cancel any membership online, according to the lawsuit.

A California district court remanded the case to private arbitration earlier this month, but noted that the information on the buy button was “clearly legible.” Best Buy declined to comment on the lawsuit.

(Reporting by Arriana McLymore, Kate Masters and Siddharth Cavale in New York City; Editing by Muralikumar Anantharaman)

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