34 Attorneys General vs. TFG Holdings: When “VIP” Memberships Turn into Negative-Option Landmines 💳⚖️
Online “VIP” memberships were supposed to make customers feel special.
For TFG Holding, Inc.—the company behind JustFab, ShoeDazzle, and FabKids—they also triggered a 34–state attorney general enforcement wave, a $4.8 million multistate settlement, and a permanent reminder that the subscription stack is now a core regulatory target. (Attorney General)
If you run SaaS, memberships, subscription e-commerce, or “VIP” clubs, this is your roadmap for what not to do—and what your contracts and flows need to look like going forward.
What TFG Was Accused Of Doing
TFG runs a family of discount fashion brands (JustFab, ShoeDazzle, FabKids) that push hard on VIP Membership Programs: lower prices today, recurring charges tomorrow.
According to a coalition of 34 attorneys general and multiple state press releases:
- Consumers were lured in by discounted “first-order” offers (e.g., cheap shoes or outfits).
- In the process, many were enrolled into a VIP Membership with recurring monthly charges.
- The key terms—automatic monthly charge, how to skip, how to cancel—were poorly disclosed, buried, or confusing.
- Once in, consumers found it hard to cancel, facing long calls, friction-laden chat, or confusing online flows. (Office of the Attorney General)
Several AGs describe essentially the same pattern:
You thought you were making a one-off purchase. In reality, you were signing up for a recurring VIP Membership at roughly $49.95/month, unless you made a purchase or logged in to “skip” the charge before the 6th of each month. Credits accumulated in store value, but many consumers never realized they’d been enrolled until charges piled up. (Georgia Consumer Protection)
Snapshot of the Settlement
The multistate settlement (announced around October 23, 2025) looks like this:
| 📌 Term | 🧩 What It Does |
|---|---|
| Total value ~$4.8M | ~$3.8M in automatic refunds to eligible consumers; $1M to participating states for costs and enforcement. (Attorney General) |
| 34-state coalition | Led by D.C., Maryland, Pennsylvania, Texas, with many others joining (AG releases from PA, MD, CT, MN, MI, TN, IL, NJ, OH, etc.). (JD Supra) |
| Automatic refunds for legacy members | Automatic restitution to consumers enrolled in VIP programs before May 31, 2016 who did not make subsequent purchases or regularly “skip” charges; many will be paid with no claim form required. (JD Supra) |
| End to “zombie” recurring charges | TFG must stop recurring monthly charges on inactive legacy accounts and cease billing where consumers haven’t engaged. (JD Supra) |
| Prospective conduct reforms | TFG must clearly disclose pricing and auto-renew terms, obtain express consent before charging membership fees, and provide simple online cancellation, often described as one-click or equivalent. (Office of the Attorney General) |
| Complaint window | Consumers with unresolved issues can submit complaints (e.g., to special TFG email / AG offices) by set deadlines (e.g., Jan. 30, 2026) for additional refunds. (Attorney General) |
TFG did not admit wrongdoing, but the injunctive terms read like a state-level subscription compliance checklist. (Attorney General)
What Exactly Was the VIP “Negative Option” Model?
The AGs and later commentary frame TFG’s practices as a classic negative-option scheme:
a subscription or membership where silence (not canceling or skipping) is treated as consent to continue charging.
In TFG’s implementation:
- Consumers got discounted pricing if they joined the VIP program.
- After that, they were charged about $49.95 each month, unless by the 6th day they either:
- made a purchase, or
- logged into their account and clicked “skip” for that month.
- Charges accumulated as store credits, usable for future purchases but often misunderstood or unused. (Georgia Consumer Protection)
AGs alleged several unfair/ deceptive aspects:
- Enrollment disclosures were not “clear and conspicuous”; material terms were tucked into fine print or obscured by promo messaging. (Office of the Attorney General)
- Some consumers didn’t realize they were joining a membership at all—just buying shoes at a discount.
- Cancellation was friction-heavy: requiring phone calls, long wait times, or confusing maze-like online flows. (Georgia Consumer Protection)
Add that up, and you get essentially ROSCA/ARL-style problems, but in a multi-brand fashion context.
Why This Is a Big Deal for SaaS and Subscription Businesses
The TFG settlement didn’t happen in a vacuum. Commentators point out that:
- State AGs are increasingly coordinating on subscription / negative-option enforcement.
- TFG sits alongside recent actions against Amazon (Prime), Dun & Bradstreet, and multiple smaller subscription businesses. (Wiley)
From a risk perspective:
- Automatic-renewal / negative-option law is no longer just an FTC/ROSCA topic—it’s a state-by-state enforcement priority.
- The TFG playbook can be applied to any recurring membership: SaaS, newsletter subscriptions, “pro” tiers, online courses, streaming, etc.
- AGs are willing to go back a decade (pre-2016 memberships) and still demand refunds and conduct changes. (JD Supra)
So if your product stack includes:
- “Free trial then paid,”
- “VIP pricing club,”
- “Pro plan billed monthly,”
you’re in the same conceptual bucket—even if you sell APIs instead of shoes.
What the Settlement Requires Going Forward (Compliance Blueprint) 🧱
The injunctive terms reported in AG releases and summaries basically read like a model negative-option compliance program. Boiled down, TFG must:
Clear, up-front disclosures
State AGs emphasize the need for “clear, conspicuous, and accurate” disclosures of:
- that the offer is a recurring membership,
- the amount and frequency of charges,
- how and by when to skip or cancel, and
- any material limitations on using credits or discounts. (Office of the Attorney General)
These can’t be buried under “Limited Time Offer!” banners or fine print.
Express, affirmative consent
No more pre-checked boxes or implied consent:
- Consumers must affirmatively agree to recurring charges (e.g., a clear checkbox acknowledging the VIP membership terms before payment). (Office of the Attorney General)
That aligns with both ROSCA expectations and stricter state ARLs (like California’s).
Simple, online cancellation
Several AGs stress:
- TFG must provide easy online cancellation, often described as “simple,” “one-click,” or at least parity with enrollment (you shouldn’t have to call or chat to cancel something you signed up for online). (Georgia Consumer Protection)
The Amazon Prime enforcement and other ARL cases are pushing the same principle: no dark patterns on the way out.
End to “zombie memberships”
The multistate deal also requires TFG to:
- stop recurring charges on long-inactive legacy accounts, and
- issue automatic refunds for specific categories of consumers (e.g., those enrolled before May 31, 2016 who never bought/“skipped” again). (JD Supra)
For SaaS and memberships, that’s a warning against running “set and forget” billing for users who aren’t engaging.
Translating TFG Lessons into Your Subscription Contract & UX 📜💻
For a subscription / SaaS practice, this is low-hanging-fruit content: contracts + flows.
Contract terms that would have kept TFG out of trouble (or at least made life easier)
For a brand or platform selling memberships, your online terms + internal policies should align with the TFG settlement principles:
| 🧾 Area | ✅ Safer Position After TFG |
|---|---|
| Offer presentation | Separate “Member price” from “guest price” clearly; label “VIP Membership” prominently; avoid banner ads that hide the recurring nature of the deal. |
| Consent capture | Use explicit, unambiguous checkbox language acknowledging recurring billing and VIP terms, close to the payment button—not in a separate policy link. |
| Renewal terms | Spell out charge amount, frequency, and skip rules in plain language. If credits are issued, clearly describe their value, expiry, and limitations. |
| Cancellation | Provide self-serve online cancellation with minimal friction; don’t require phone calls, long hold times, or “save” gauntlets. |
| Inactivity rules | Consider auto-pausing or terminating billing for long-inactive accounts and notifying users before you bill again. |
Commentary from subscription-law firms is already urging businesses to treat TFG as a template when reviewing their own negative-option practices. (JD Supra)
Demand Letters in the Negative-Option Space ✉️
This fact pattern naturally lends itself to pre-suit demand letters, both from consumers and from businesses.
From the consumer side
A typical pre-AG / pre-class-action demand letter might allege:
- you were misled into a recurring membership,
- the site failed to clearly disclose auto-renewal terms, or
- cancellation was unreasonably difficult, resulting in unauthorized charges.
The letter then demands:
- refunds of all recurring charges,
- cancellation of the membership, and
- sometimes a commitment to adjust the flows.
TFG’s settlement, like others before it, arms these letters with stronger precedent: “Your practices are substantially similar to those that 34 AGs just called deceptive in TFG.” (Wiley)
From the business side (B2B contracts)
If your client is:
- licensing white-label subscription tech, or
- running an affiliate program that funnels traffic into a membership funnel,
they may need demand letters upstream when a third-party vendor’s flows expose them to TFG-like risk:
- pointing to contractual warranties about compliance with ARL/negative-option laws,
- demanding remediation of UX patterns (pre-checked boxes, hidden cancellation), and
- reserving rights to indemnity if regulators come knocking.
Again, TFG gives you concrete language to point to: explicit consent, clear disclosures, one-click cancellation, no zombie charges.
Bigger Trend: Negative-Option Law as a Core SaaS Risk, Not a Niche Consumer Issue 📈
The TFG settlement is one piece of a broader 2025 pattern:
- Amazon pays billions over Prime subscription practices.
- Dun & Bradstreet pays millions for subscription-renewal issues.
- Smaller companies (like American Mint LLC) get hit with six-figure negative-option settlements. (The CommLaw Group)
And states are:
- passing or tightening automatic-renewal laws,
- coordinating through multi-AG task forces, and
- using TFG-like cases as public examples of “don’t do this.”
For subscription businesses, the practical takeaway is simple:
- Treat auto-renewal compliance as a core product and legal function, not a box-check at the tail end.
- Ensure offer design, checkout flows, reminder emails, ToS, and cancellation UX are all aligned.
- Assume your flows will be reviewed side-by-side with the TFG injunctive terms if anything goes wrong.
If your practice focuses on demand letters, disputes, and contract drafting for online businesses, this is fertile ground:
- drafting negative-option compliant terms and flows;
- defending small and mid-size SaaS / DTC brands when they receive AG inquiry letters or private demand letters;
- and helping clients audit their subscription funnels before they become TFG 2.0.