Actress Kate Hudson in her Fabletics activewear. Fabletics has raised the ire of the ACCC. Picture: Facebook

Kate Hudson’s activewear business has been made to revamp its website after Australian customers complained of a new type of rort — the “subscription trap”.

Fabletics, a US-based exercise clothing retailer co-founded by Hudson, agreed to change its site after the Australian Competition and Consumer Commission raised concerns about potentially illegal misleading conduct due to inadequate disclosure of ongoing costs of a “VIP” membership program.

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Kate Hudson shows off her Fabletics activewear. Picture: FacebookSource:Supplied

Following their first purchase of discounted activewear, Fabletics’ customers are charged a monthly US$49.95 ($A66.60) subscription fee for VIP membership.

Many had no idea that’s what they were signing up for.

“We alleged that’s misleading conduct and the detriment is quite large,” ACCC chairman Rod Sims told News Corp Australia.

Fabletics generated $US150 million ($A200 million) in sales in 2015, according to Forbes.

Mr Sims said a year ago he had not heard of a “subscription trap” — a term used to describe online retailers using a consumer’s single purchase of a heavily discounted item to sign them up to a paid, ongoing subscription without properly disclosing ongoing fees.

“It is new and so we’ve moved fairly quickly. Complaints have shot up,” Mr Sims said.

While the commission had accepted an “administrative solution” from Fabletics and a Singapore-based retailer, ScootPrice, merchants were now on notice: “We may end up taking someone to court.”

Kate Hudson promotes Fabletics to Australian customers. Picture: Fabletics/FacebookSource:Supplied

Both Fabletics and ScootPrice have vowed to make membership fees clearer on their websites and in the checkout process.

The ACCC received some complaints direct from consumers. But most of its intelligence was coming from monitoring online forums.

At productreview.com.au ScootPrice has 82 “terrible” ratings — the lowest possible — out of 84 reviews. The first review was posted in September last year.

Mr Sims said America’s Better Business Bureau had received 1400 complaints about Fabletics since 2012.

Fabletics’ parent JustFab has been described as the “biggest scam in online fashion”.

ScootPrice did not respond to requests for comment.

This morning, a JustFab spokesman said: “Obtaining guidance from the the (sic) ACCC has been very helpful in making sure we communicate in the best way possible. This is particularly important when the membership model in fashion is fairly new for Australia. We are pleased to implement the changes they have asked for, and are taking steps to go far beyond their requests.

“In addition to the ACCC requests, we are making additional enhancements to the ways in which we communicate and engage with our customers. (These are) adding video notifications because we know that today many people prefer this, extended customer service to 24/7 support, available by phone or online starting July 1, building the software required to implement online returns for all orders (and) releasing online cancel to all customers in Australia in the next few months.”

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