Kate Hudson's activewear subscription service faces backlash

From Birchbox to Stich Fix, subscription box services with monthly fees are unwrapping success.

But Kate Hudson's athletic wear company, Fabletics, is now under investigation after customers complained they didn't know they were signing up for a subscription.

"Thousands of customers have gone on social media; they've complained to the Better Business Bureau that they didn't see this coming. And worse, when they discovered this and they tried to reach the company to cancel their membership, they got the runaround," Peter S. Goodman, global editor-in-chief of the International Business Times, said Tuesday on "CBS This Morning." "They couldn't get a real person on the phone, their messages didn't get returned, they couldn't get through by email."


While Fabletics customers are promised the first activewear outfit for $25 in a "new VIP member exclusive," Goodman said customers who didn't read the fine print and made the purchase were actually authorizing the company to bill them up to $49.95 a month in a recurring membership.

According to the Better Business Bureau, there have been 1,291 complaints filed against Fabletics' parent company, Just Fabulous, Inc.; Fabletics itself had 98 complaints.

Fabletics responded to the backlash, stating: "We make it very clear during the Fabletics shopping experience, and in multiple places on the website, that if a customer takes advantage of these membership prices, she/he is joining our VIP service."

But Goodman said customers must go through many screens to get a clear description of the service.

"Either these people [who complain] are all stupid, or something happened here by design to trick people and take advantage of people's limited attention span," he said.

As of this writing, when "Privacy Policy" or "Terms of Service" is clicked during the sign-up process, the user is redirected to the general site, not the fine print. But once the customer shops and reaches checkout, he or she has the option of purchasing just the items in the cart or a "VIP Membership" option with an explanation of how the membership and fees work.

Members have the option to "skip the month" and not be charged for the month's service. According to the site, if the user does not take action by the 5th of the month, the customer's credit card will be charged $49.95.

Aside from reading the fine print and researching the company, Goodman recommended using a trusted credit card to avoid being stuck in a unwanted subscription situation. That way, you can dispute the transaction with your credit card company and have them cancel the charge, he said.