ClassPass has listed thousands of âbeauty and wellnessâ boutiques as partners without their knowing or despite their repeated complaints, according to an amended complaint to a proposed class-action lawsuit filed Tuesday. This falsely inflated the total size of the fitness startupâs network ahead of its October acquisition by Mindbody while leaving small businesses to deal with angry customers, injured reputations, and potentially dangerous situations, the complaint claims. Without any agreement with the businesses, ClassPass systematically uploaded the information of thousands of boutiques, copied their websiteâs wording almost âverbatimâ or used generic language, often listed inaccurate appointment times, and took subscribers' money, only to leave unaware small businesses to clean up the mess, per the filing. At times, ClassPass attempted to come to a formal agreement with the boutique studios without informing them that they were already listed as partnersâa process that one small business described as âgaslighting.â âClassPass pays little or no regard to whether gyms, salons, and other entities desire to do business with it at all,â the lawsuit states, adding elsewhere: âThese fake partner listings are central to ClassPassâs business model and have contributed to ClassPassâs apparent success.âThe purported size of its network is a primary reason so many customers and partners join the ClassPass platform, where monthly subscribers can reserve classes and services using credits, often at below-market prices. But according to the lawsuit, well over a third of ClassPassâ purported 20,000 âbeauty and wellnessâ partners have never agreed to any sort of relationship with the startup. The number rises to over 50 percent in major metropolitan areas like New York City, Phoenix, and Denver, the suit says. In Bridgeport, Connecticut, it passes 90 percent. While the issues stemming from the âfalse listingsâ are numerous, the lawyer leading the case against ClassPass told Motherboard what ties them together is a lack of control.âI've spoken to businesses in pretty much every single state,â attorney Raphael Janove said. âA central theme that all businesses have is this idea of consent and agreements and knowing how your business is listed online. âAfter the amended complaint was filed Tuesday, Janove noticed ClassPass changed at least some descriptions of its purported partners, instead saying they were part of âClassPass Concierge, a beta program that allows you to request appointments at businesses that are not ClassPass partners,â though some incorrect appointment times remained listed. The company did not immediately respond to a request for comment.The plaintiffs are claiming, among other things, false affiliation, false advertising, and unfair competition under federal and state law.ClassPass worked to aggressively expand its footprint in the beauty-and-wellness space after the pandemic ground the in-person fitness experience to a near-halt in 2020. After watching its revenue plunge 95 percent and laying off or furloughing half its staff, company leadership decided it needed to invest in a more pandemic-appropriate category. âIn 2021, we plan to hyper-scale the wellness and beauty options in our network,â chief commercial officer Zach Apter said early this year. Already, by January 2021, such classes comprised 55 percent of the platformâs entire catalogue in New York, according to Modern Retail. Now, the fitness startup boasts thousands and thousands of such partnerships around the country. But the lawsuit states that ClassPass âfalsely advertised the size of its network by creating thousands of ClassPass pages for businesses without their permission,â which bolstered its public image. When the fitness scheduling platform Mindbody acquired ClassPass last month, its CEO listed ClassPassâ âhuge network of wellness businessesâ as a primary reason.Today, MindBody uses the size of the ClassPass network to âenticeâ other partners into doing the same, the lawsuit states. On its website, Mindbody states, âJoin over 50,000 health and wellness partners around the world growing their businesses on ClassPass.âClassPass co-founder Payal Kadakia has stated that the company added unknowing businesses to its network from early on. On the NPR podcast âHow I Built Thisâ last year, she said that the startup made âa volume bet essentiallyâ that if it listed many partners on its platform, both studios and customers would be incentivized to sign up. That included âcertain studios that we just put on the platform where we didnât have full agreements with yet,â she added. According to Kadakia, the clothing brand Lululemon also sent ClassPass a cease-and-desist letter after the startup offered Lululemon gift cards to anyone who signed up for the fitness platform despite having no agreement with the company. âIn sum, ClassPassâs scheme of listing fake âpartnersâ extends back to its founding. It is not a unique, recent phenomenon. Nor is it limited to beauty and wellness industries, as it also extends to gyms and fitness studios,â the lawsuit states. The lawsuit argues the ClassPass business model is inherently based on what is called a âtwo-sided network effect,â which requires ClassPass to have an enormous number of both customers and partners in every single market it operates in or risk failure. âPut simply, no number of vendors in New York will increase the appeal of the platform to a customer looking for service only in Missouri,â the lawsuit states. âThis limitation means that platforms like ClassPass must independently reach a critical mass of users on each side of the platform in every area they seek to operate.âThe lawsuit presents the grievances of a slew of small businesses around the country who never wanted to be partnered with ClassPass but nonetheless ended up listed on the platform. Among them is Hairroin Salon in Los Angeles, California, which âexplicitly and repeatedlyâ refused ClassPassâ advances, only to realize, after a customer got her their nails done and then claimed âshe paid through ClassPassâ that the business had been listed on the platform.âThe appointment was booked online using an invalid credit card, as the charge was declined. The phone number and email address reserving the booking were contacts at ClassPass, but after leaving a voicemail and sending an email, Hairroin Salon did not receive a response,â the lawsuit states. When the small business finally got through, they felt ClassPass was âgaslightingâ them, as the company said it would close an âaccountâ that Hairroin Salon had never agreed to in the first place. Others didnât even get that lucky. Leeah Nails in Montclair, New Jersey, for example, tried multiple times to get ClassPass to remove its landing page on ClassPass, but the fitness platform ârefused,â only doing so after the owner filed a lawsuit.ClassPass pitches itself to partners as a way for them to fill empty seats in classes, giving small businesses much-needed extra revenue without taking up inventory meant for direct, dedicated customers. The startup grew enormously offering their classes at such unsustainably low rates that customers got used to, numerous former partners told VICE last year. The small businesses thus faced a scenario where they felt they had to be on the platform, even if they didnât want to be. Leeah Nails currently feels that pull. Per the lawsuit, the owner is worried âthe false listing of hundreds of partners in the ClassPass Partner Networkâ will force it to rejoin the platform and swallow âthe discounted rates or risk losing customers who wish to use ClassPass to book services because of the wide offerings of the ClassPass Partner Network.âTo sneak around the unaffiliated partners, ClassPass workers sometimes pretend to be unaffiliated themselves in order to book classes on behalf of customers, the lawsuit alleges. The Facial Bar in Kansas City, Missouri did not know ClassPass had listed it as a partner âuntil a ClassPass representative, who only identified themself as a âpersonal assistant,â attempted to book a reservation on the customerâs behalf,â the lawsuit states. Worried the âpersonal assistantâ was a scammer, the company reached out to the customers, who said she had booked through ClassPass.The owners of Salon Phoenix, in Hoboken, New Jersey, started to worry that ClassPass was ruining their âhard-earned reputationâ after finding out the fitness platform had listed the company as a partner. The salonâs own website states high up: âI NEVER DOUBLE BOOK CLIENTS.â ClassPass published a version of that language to its Salon Phoenix landing pageââthey never double book clients,â ClassPass statedâbefore listing âfake appointment timesâ that âdo not exist or availability when Salon Phoenix is already booked,â according to the lawsuit. Salon Goldyn in Denver, Colorado has dealt with âmultiple frustrated and upset customers who either booked unavailable appointments through ClassPass or who booked the salonâs services on the salonâs websiteâ and tried to pay with ClassPass credits, according to the lawsuit. But Salon Goldynâs concerns extend beyond that. The small business started to worry that ClassPass is putting its employees and customers at risk. It âabsolutely does not want customers to show up earlyâ in order to minimize COVID-19 exposure and refused to partner with ClassPass when asked, according to the lawsuit. When ClassPass added the business to the platform against the businessâ wishes, it also told customers âto arrive 15 minutes in advance.â Rapha Massage in Bridgeport, Connecticut, never wanted to partner with ClassPass. When it had done so with Groupon, a Groupon customer asked for âsexual services in the middle of a massage and made the therapist fear for her safety,â according to the lawsuit. The business now âstrictlyâ screens its customers to root out âthose who are searching for sexual services,â as well as other potential medical issues, the lawsuit. The massage parlor did not want to partner with ClassPass and have âunsolicited customersâ arrive. Nevertheless, it ended up on the ClassPass platform. Midvalley Massage in Millcreek, Utah, has struggled with a similar issue related to ClassPass. âIt conducts a rigorous screening of all potential customers and obtains credit card information to ensure that customers are not sexual solicitors or internet scammers,â the lawsuit states. When Classpass asked Midvalley Massage to partner with the tech platform, the business repeatedly declined. ClassPass, according to the suit, added them anyway.
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ClassPassâ decision to list these businesses regularly came at the expense of angry or unknowing small businesses which, âthrough no fault of their own, have faced upset customers who blame them for the confusion and not ClassPass, and have received negative reviews and ratings in important online forums,â the lawsuit states. Businesses have said ClassPass has made it harder for massage parlors to screen for people âsearching for sexual servicesâ and for salons to adhere to strict COVID-19 protocols; listed âfake appointment timesâ at salons that promise to never double-book; and even tried to purchase a class for a ClassPass customer as a âpersonal assistant.âMany purported partners are listed on ClassPass alongside generic language stating that, for example, âMassage Spas are busy and wait times can be unpredictable. But getting pampered shouldnât be stressful.â The companyâs mass partnership strategy has also made it and the small businesses both vulnerable to faux pas. For example, ClassPass listed a Jewish community center with a photo of a nude woman getting a massage.Do you or have you worked for ClassPass? From a non-work device, contact the reporter at maxwell.strachan@vice.com or via Signal at 310-614-3752 for extra security.
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