SEATTLE — The Washington Attorney General's Office says Seattle-based Julep Beauty Inc. and its owner, Jane Park, will pay $3 million for using what the office says were deceptive "negative option" marketing tactics.
The company objected to the way the Attorney General's Office characterized the matter and said it never engaged in deceptive marketing.
The Attorney General's Office says Julep's tactics lured customers into signing up for recurring boxes of products but made it difficult for customers to cancel subscriptions. The practices occurred between 2012 and 2015.
“It is maddening for consumers to receive products they don’t want but are charged for,” Attorney General Bob Ferguson said in a statement.
Park, however, sent out a blistering statement, accusing Ferguson of deceptive practices in a news release he sent out about the settlement.
"His statement to the press was full of inaccuracies, errors and mischaracterizations. I understand from his office that they are in the process of correcting the mistakes and reissuing the press release.
"To set the record straight, Julep has never engaged in deceptive marketing. We have always been clear about the terms and benefits of our Maven subscription program, which is beloved by thousands of women across the country. Unlike passive subscriptions, at Julep we actively invite our Mavens to engage with us monthly, sending multiple communications prior to any charge. Furthermore, the consent decree the AG’s office signed has no mention of the phrase 'deceptive practices”'– this statement was new to us as of the press release this morning."
The Attorney General's Office said Julep agreed to pay $1.5 million in restitution to affected subscribers, $250,000 in costs and fees, and to provide hygiene products with a retail value of $1 million at no cost to qualified charities and government institutions that serve victims of domestic violence and the homeless and prison populations.
Another $250,000 in civil penalties will be suspended if Julep and Park avoid further violations of the law. The Attorney General's Office also required the company to provide adequate disclosures of the costs and terms of its subscription services and to employ sufficient customer service staff to handle complaints and cancellations.
But Park said $1.5 million in refunds were issued before the Attorney General's Office ever contacted the company.
"We do not know where the attorney general gets $3 million from, and believe it is unethical and deceptive for him to characterize our settlement in this way."
Julep designs and produces its own nail polish and other beauty products and aggressively markets them through social media and online advertisements. The company sells primarily through its website. It also distributes products through three Seattle beauty parlors, retailers such as Sephora and Nordstrom, and on TV through QVC.
Park explained what happened to her company this way:
"As a startup, we experienced some operational challenges over two years ago that we addressed proactively and voluntarily, months before ever being contacted by the Attorney General’s Office. In the summer of 2014, we experienced a period of extraordinary growth at the same time that a change in fulfillment practices caused delays in shipping. As a result, we experienced an unprecedented volume of customer service calls and we were not able to answer all of our call volume. We took immediate action to solve these operational challenges because I am absolutely dedicated to delighting our customers. We increased the size of our customer service team by over 50%, added extended call hours, hired experienced operational leaders and issued refunds to impacted customers. I am so proud of our amazing and passionate customer service team - those of you who have called us have probably experienced first-hand their exceptional commitment to helping our Mavens resolve their questions and concerns."