Fabletics was founded in July 2013. Fabletics is a subscription-based clothing line. The company, which initially was known as Justfab, which you could buy shoes, turned into a Kate Hudson athletic line. They have done millions in sales over the past few years they have been in business. The only catch is that you can't buy any clothing for a reasonable price unless you are a member meaning you sign up and pay a monthly fee to get so much of the overall cost. Every month, they allow you to choose an outfit; however, you will be charged if you don't opt-out of picking an outfit. The problems started when people realized that they were still being accused long after they unsubscribed to the website, which angered many customers. Another catch is that you cannot unsubscribe over the internet. It has to be done via the phone as information could be insufficient on line. To date, the company has successfully opened seven stores that you can go into and shop at and thriving online E-commerce business. They make most of their money off of their website; however, the website is where most of the issues this company has stemmed from because it can trick people into signing up for things they didn't mean to and end up being charged for without the customer being very aware.
This paper will evaluate the ethical theories and how they apply to the company, and whether or not Fabletics is honest or not. These ethical theories will determine the company we have learned about and gone over in class. These theories consist of Individualism, utilitarianism, and Kantianism. From the view of Individualism, it would be unethical because they only maximized profit for themselves. From a Kantianism point of view, the company could be looked at as both ethical and unethical because they aren't always treated as a means to the end.
But on the other hand, customer satisfaction isn't the company's priority either, so it could be either one. From a Utilitarianism point of view, this company would be unethical because they are not trying to maximize customer happiness. After all, many customers report that they are still being charged even after being unsubscribed to the website.
Ethics case controversy
Usually, when you visit a website, you can shop and checkout, but some websites require that you sign up to be a member, usually for promotional deals or lower prices on the item you are purchasing. That can often be enough to persuade someone to sign up because if It means you do not have to pay the full price, that would be an enticing deal. However, when you sign up for fabletics, that is almost always the case. Most of the time, you would think that when you sign up for something and for whatever the reason, maybe you do not want to be signed up any longer, you can cancel your membership, and you will not be charged anymore? That is, unfortunately, not always the case when it comes to fabletics. Often, customers report they are still being charged a year after canceling their subscription with the company. This prompts anger and frustration within customers that leads to dissatisfaction. Often the company brushes off this dissatisfaction and doesn't see the big deal. When you sign up for something typically, you're under the impression that if you no longer want it or cannot keep up with it, you can cancel it and stop being charged? Wrong.
Many customers of fabletics are considered to be "VIP Members" this means that they can shop at a lower rate and are also able to choose an outfit every month that they do not have to pay for, so to speak, because their membership charges would cover it. However, within the fine print, many customers say that if you do not choose an outfit for that month, you are charged for it regardless. Another problem that customers have with this company is even after they cancel their subscription, for whatever reason, some are still being charged every month. They often describe it as jumping through hoops when trying to unsubscribe from the website, simply because you cannot cancel your subscription online. It can only be done over the phone and getting a customer representative on the phone to cancel your membership is another task in itself. This type of customer service has brought frustration and copious bad reviews to the site, and the company has now rattled the company because they are shocked over how many they have.
At first, it was that out of their total amount of customers, the number of bad reviews wasn't enough to cause concern at a corporate level, now, however, it has not only caused concern, but it has also pushed the company to consider allowing a feature on the website that you the customer can cancel your subscription online to avoid having to wait for a customer service rep and hopefully allow people to cancel it whenever they want. But they have also said they do not understand why people are being charged after canceling their subscription.
Normally, many consumers who sign up to be a member of fabletics are not aware of just exactly what that means. When they try to cancel their membership, they are still being charged after they were told their subscription has been canceled and mentioned that it is such a strenuous task even to get a customer service rep on the phone. That is key because you cannot cancel a subscription over email. After all, fabletics claim that the email's information could not always be sufficient when putting the cancellation process through. Also, within this article, it is noted that the co-founders and CEO's who were sued by Bank of America are the culprits behind many other "risk-free trial" gimmicks that end up tricking customers into signing up for something they will unknowingly be subscribing to and thus being charged for even after cancellations were "made."
In addition, consumers often feel Fabletics are conning them. Some even say that the issues lie
Twitter Customer Complaint
right in the customer service department. One person even tried to use a gift card on the site that was still valid, but the sight wouldn't allow them to purchase anything with it. The woman finally was able to use the gift card but even went as far as saying she had to throw the leggings and sports bra out because of the principle, stating she "won't buy from a company that engages in shady campaigns and promotions like this.
Fabletics most prominent marketing technique is via Instagram, and in this article, it is broken down as such. They chose 12 female influencers in the fitness, fashion, and lifestyle categories. They then sent different outfits from fabletics that they then post themselves in and give their opinions on it. Most influencers also have blogs in which they write about their experience wearing and living in fabletics. The problem with this marketing technique is that so many people who follow these influencers try and emulate their lives and trust what they are saying so that their followers go and check out fabletics and sign up for it. Which, in turn, boosts the sales and subscriptions of their product. However, most customers buy blindly and don't often realize that they will be charged every month unless they opt-out on the fifth day of the month not to choose an outfit.
Fabletics has successful e-commerce sales will now turn into a real-life shopping experience. The company plans to open its 7th store to date in Minnesota's mall of America. It would be better for customers to shop in person because then they will be verbally able to opt-out of signing up for anything. Whereas when you shop online, it can become confusing as to what you're signing up for, and sometimes you don't even realize you're signing up for anything. So, opening this store will be good for consumers because it gives them the chance to shop and not have to subscribe to the company.
There have been more talks about how fabletics are considering offering members a chance to unsubscribe from the service online. Instead of having to do it over the phone and wait for one of the customer service reps to answer you. However, that is just an idea right now, and the CEO said that "maybe in the future, we'll roll that out." If the company were to implement that feature, it would probably save many problems and a lot of bad reviews from unhappy customers that they have to jump through hoops to cancel their subscription.
Stakeholders are defined as someone or a group of people with interest in a company and can either affect or be affected by a business. In this case, the stakeholders would be the company Fabletics itself and the customers who were affected by the company fabletics. The customers were affected because even after canceling their subscriptions, they were still being charged, and no one in the company seemed to care or take immediate action. They were almost trapped whether they were subscribed or unsubscribed because either way, the company was still charging them the subscription see.
The other stakeholders would be the company itself because they affected their customers by still charging them even after they were unsubscribed. They also were able to adjust not to keep happening, yet they did not rush. If they ran and made changes, they would not make such a profit by still charging their customers, which would negatively affect their business.
When analyzing my case using Individualism, I can conclude that the company fabletics did not follow Individualism which the whole theory behind it is for a company to be able to profit within the constraints of the law which in analyzing my case, they did not profit in the constraints of the law by still charging people subscription fees long after those customers had gone on and canceled their subscriptions. Which, in doing so, was not an ethical way to profit from any standpoint. Fabletics does their marketing to customers more appealing, thus drawing them into the whole experience. However, they then use that to their advantage by making their website a subscription base, which then could trip up customers who do not understand the fine print that they will be charged a monthly fee no matter what when they sign up.
The main issue is that the company Is not being truthful and forthcoming to their customers about how difficult and taxing it is once they have signed up. Cancel their membership, which doesn't discourage people from signing up and creates more headaches in the future and bad reviews for the company themselves, which I don't think they have thought through
Utilitarianism is meant to maximize happiness for all. With that in mind, I stepped back and looked at all the negative things against Fabletics. Whether that be the bad reviews, the unhappy customers whose thoughts weren't acknowledged, so they are now participating in interviews to speak out about the far from good experience with the company.
Utilitarianism would not find fabletics to be ethical because they do not care about their consumers' happiness. I say this because if they did, they would have a better customer service response. They would not make it near impossible to actually cancel your membership and not be charged even long after doing so. They would be more worried about consumer satisfaction and less concerned about making their profit. Yet they don't. They are simply in this to maximize their year's profit. Not the happiness of all sure, it makes them happy to pocket all this money. But it does not make the consumers happy. Now, after nearly seven years, they are just growing increasingly concerned about the bad reviews as the number ratio from bad to good grows substantially higher.
That is why I don't think utilitarianism would consider this company to maximize happiness for all. They would look at fabletics and see that they are not a consumer-oriented business, forgetting that they wouldn't be a business without the consumer. With no one to buy their products, they would be where they are today. They need to focus more on the customer's happiness, which I don't know what customers would be pleased with still being charged nearly a year after canceling their account and membership.
Kantianism is a moral philosophy introduced by Immanuel Kant that emphasizes that the doer's motivation does not determine an action or decision. There are four main principles in Kantian ethics: acting rationally, having respect for people, being driven by only goodwill, and looking to do the right thing.
The fabletics case would not be considered ethical by any means because the company is not driven by goodwill. They are not trying to improve people's self-esteem or do anything right. They are only looking to increase the profits, and they don't care about the price it costs consumers. As long as they walk away with the money, they are fine. They do not even flinch when asked about the people still being charged after canceling their accounts. They say they are unaware but will look into it. This company is not being driven by goodwill. They are not trying to do the right thing. Therefore, this company is unethical in just about every aspect imaginable.
According to the virtue theory, I do not think that that companies' character is ethical. This is because they are not displaying an excellent or moral character when it comes to their customers. There are four Cardinal Virtues a moral person should have which are courage, honesty, temperance and self-control and justice along with fairness. There is also an intellectual virtue called prudence used when analyzing whether a person is virtuous or not. Fabletics does not put their customers. First, they do not express any concern to the customers overall. If they did, then customer satisfaction would be top of their list, i.e., they would want to make sure that they were doing everything to make sure that they were tending to their customers. For example, the company would be more responsive to bad reviews. They would also be concerned that the customer service department is less than responsive to customers. Overall, Fabletics is not a virtuous company because they are manipulating their customer which goes against the four cardinal virtues
Justified Ethics evaluation
After analyzing the case, I do not feel Fabletics were as ethical as it could have been. They did not maximize happiness; the customers were treated solely as a means to an end. The company itself is only interested in making money, and they don't care how it affects their customers.
In my opinion the company should make sure that the customers who wish to unsubscribe and or do unsubscribe are not charged the month fee after they have canceled their membership. By doing this it would ensure that customers would be more satisfied, and it would diminish the amount of bad reviews the company receives regarding this particular issue. It would also encourage better customer satisfaction, if customer service was more responsive to this issue they would have a better reputation with the general public encouraging more business if people did not need to be concerned about signing up for the membership. More people would be willing to sign up if they did not have to worry about still be charged after they cancel their account if they did need to cancel it for any reason.
Company Action Plan
Fabletics was founded in July 2013. Fabletics is a subscription-based clothing line. The company, which initially was known as Justfab, which you could buy shoes, turned into a Kate Hudson athletic line. They have done millions in sales over the past few years they have been in business. The only catch is that you can't buy any clothing for a reasonable price unless you are a member meaning you sign up and pay a monthly fee to get so much of the overall cost. Every month, they allow you to choose an outfit; however, you will be charged if you don't opt-out of picking an outfit. The problems started when people realized that they were still being charged long after they unsubscribed to the website, which angered many customers. Another catch is that you cannot unsubscribe over the internet. It has to be done via the phone as information could be insufficient on line. To date, the company has successfully opened seven stores that you can go into and shop at and thriving online E-commerce business. They make most of their money off of their website; however, the website is where most of the issues this company has stemmed from because it can trick people into signing up for things they didn't mean to and end up being charged for without the customer being very aware.
Some steps they should take would be making improvements to their website to allow customers to cancel their subscription online instead of on the phone. This would diminish wait times that are spent on the phone, and this would also allow for easier tracking on whether or not the company is still charging you. Another thing they could do would be to handle all customer complaints as they come in. This means being proactive with them and trying to resolve the issue as fast as possible would benefit the customer, but it would also improve its overall ethical problems. This choice would make the company more ethical by maximizing consumers' overall happiness and making their actions more ethical for an end product. Not only would this fix their bad reviews, but on top of that, if they had better customer service, they would be able to help combat the issues of customers still being charged after they have canceled their subscription.
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“Case Study: Fabletics Marketing Strategy Spotlights Instagram Influencers.” Mediakix, 14 Aug. 2020, mediakix.com/blog/fabletics-influencer-marketing-case-study-instagram/.
O'Connor, Clare. “Fabletics, Kate Hudson's Controversial Athleisure Brand, Plans To Open 100 Stores.” Forbes, Forbes Magazine, 12 Feb. 2016, www.forbes.com/sites/clareoconnor/2016/02/12/fabletics-kate-hudsons-controversial-athleisure-brand-plans-to-open-100-stores/?sh=62dfe18c4492.
Schlossberg, Mallory. “Kate Hudson's Controversial Athletic Clothing Company Is Considering Making a Major Change to Its Policies.” Business Insider Australia, Business Insider Australia, 30 Oct. 2015, www.businessinsider.com.au/justfab-and-fabletics-are-getting-audited-2015-10.