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Rihanna's Savage X Fenty has agreed to pay $1.2 million to settle a consumer protection lawsuit with California regulators which alleged that the lingerie company engaged in false and misleading advertising practices in connection with its VIP membership program, an automatically renewing online subscription service.
According to the complaint, filed by the Santa Clara, Santa Cruz, San Diego and Los Angeles County District Attorney's Offices and the Santa Monica City Attorney's Office, Savage X Fenty deceptively advertised discounts on its lingerie and clothing products without clearly and conspicuously informing consumers that they must enroll in the membership program, which automatically renews until canceled, and failed to disclose material limitations on store credits offered under the program. The lawsuit further alleges that Savage X Fenty failed to properly disclose the material terms and conditions of its automatic renewal plan and obtain proper consent for such charges.
Under California law, online businesses that market to consumers need to disclose all automatic renewal charges "clearly and conspicuously," whether part of a subscription, membership or other recurring fee.
"Consumers have a right to know up front what they are paying for and how often," Santa Clara Deputy District Attorney Jennifer Deng said in a statement announcing the settlement. "Businesses have a duty to be transparent about their automatic renewal charges."
As part of the settlement, Savage X Fenty will pay $1 million in civil penalties, $50,000 in investigative costs and $150,000 in restitution to California VIP members. The company is also permanently enjoined from, among other things, "[m]aking any materially false or misleading representations on its websites, advertising, emails, or any other form of marketing, including, but not limited to, the applicability of membership pricing and how to use membership credits."
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