‘Unlawful’: Skincare Co. DermaSet Hit with Class Action Over Recurring Debit Transactions
Warshauer v. DermaSet Inc.
Filed: February 11, 2021 ◆§ 1:21-cv-00174
A class action alleges DermaSet has made recurring debit transactions without first securing written authorization to do so or providing mandatory disclosures in a clear and conspicuous manner.
Electronic Funds Transfer Act California Business and Professions Code California Consumers Legal Remedies Act
California
A proposed class action alleges skincare product maker DermaSet has broken the law by debiting consumers’ bank accounts on a recurring basis without first securing written authorization to do so or providing necessary disclosures.
The 18-page complaint alleges the online cosmetics company has violated California law and the federal Electronic Funds Transfer Act by executing recurring debit transactions linked to purportedly free trials without consent, failing to “clearly and conspicuously” disclose the terms of its autorenewal practices, and conditioning purchases on an illegal “negative option” scheme.
“On information and belief, Plaintiff alleges that Defendant’s policy and practice is to engage in illegal and deceptive negative option sales to unfairly surprise consumers with large recurring transactions as part of a ‘free trial’ scam,” the lawsuit out of California federal court alleges.
According to the suit, the plaintiff purchased a 30-day trial of DermaSet’s products for $4.95 on January 21, 2020. After clicking the “Try for 30 Days” option, which appeared below the statements “Free for 30 Days,” “2 month supply” and “Pay Only Shipping & Handling,” the plaintiff, the case says, was presented with a form that stated “Introductory offer pay S/H” and “Where should we send your 30-day trial?,” in addition to a form collecting the woman’s information and a button that stated “Rush my Order!”
Below this form was, in smaller text, hyperlinks to DermaSet’s privacy policy and offer terms, the suit claims. The “Rush my Order!” button, however, did not require the woman to accept any privacy policy or offer terms to complete the transaction, the lawsuit says. In even smaller text below the privacy policy and offer term links, which the suit reminds were “below a large colorful advertisement,” was the defendant’s note that stated, according to the lawsuit:
“Pay $4.95 S&P, today w/30-Day Trial. Call within 30 days & return to avoid monthly payments. Your card will be charged $179.00 day 30 after trial order. New tube sent every 60 days + $4.95 S&P at discounted $139.00. Call anytime to cancel future shipments.”
After placing her order on January 21, the plaintiff’s debit card was charged $4.95 for shipping and handling of a two-ounce “free trial” cream, the case says. The following month, on February 18, the defendant, to the plaintiff’s surprise, then automatically debited from the woman $179 as part of a recurring transaction for which she received no written correspondence confirming or explaining the auto-withdrawal, the lawsuit claims.
Thereafter, DermaSet began seeking collection of $259 through letters and emails, the suit claims.
According to the lawsuit, the defendant’s 30-day free trial offer is what’s called a negative option, or an offer or agreement to sell or provide any goods or services that comes with the hitch that a customer’s silence or failure to take affirmative action to stop the goods or services or cancel the agreement is interpreted by the seller as an acceptance of the offer.
The case alleges DermaSet’s negative option is unlawful in that the company does not clearly and conspicuously disclose the material terms of the transaction before obtaining a customer’s billing information, obtain express informed consent before charging a consumer’s card or account, or offer a simple mechanism whereby a customer can stop the recurring charges.
“Accordingly, Defendant failed to obtain a consumer’s express informed consent to make such charges,” the suit reads. “Further, while Defendant accepted transactions through the Internet, Defendant required cancellation to occur telephonically, which is not a simple mechanism.”
The suit looks to cover all individuals in the United States whose bank accounts were debited on a recurring basis by DermaSet without a written authorization that was signed or similarly authenticated for preauthorized electronic fund transfers within the one year prior to the filing of the complaint.
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