SmileDirect Has A History Of Making Customers Frown

SmileDirectClub is a direct-to-consumer medtech platform that helps customers straighten their teeth. According to a New York Times expose, the company appears to have a reputation of making customers frown when they weren’t happy with their expensive purchase and demanded a refund.

NYT: Refund Contingent On Nondisclosure Signing

The New York Times’ columnists Erin Friffith and Peter Eavis wrote this week that SmileDirect told certain unhappy customers they would only receive a refund if they sign a nondisclosure agreement. The company has a 30 day refund policy but anything beyond that is subject to the nondisclosure provision which was put in place in 2016.

Doing so would prevent unsatisfied customers from posting online reviews cautioning other potential customers about their negative experiences.

SmileDirect became a public company last September and its journey since then has been mostly negative. The initial public offering was priced at $23 but shares opened 11% lower than expected and ended 2019 below $9 per share.

An excerpt from the agreement, per The New York Times, states the customer “will not make, publish, or communicate any statements or opinions that would disparage, create a negative impression of, or in any way be harmful to the business or business reputation of SDC…”

The company’s Chief Legal Officer Susan Greenspon Rammelt told NYT it’s actions are necessary to protect itself. She highlighted this is especially relevant when the company believes there is an “organized campaign to damage our reputation” among the investment community, consumers, or its dentist partners.

Eavis: ‘Tough Agreement’

Eavis was a guest on CNBC’s “The Exchange” segment on Thursday to further discuss his expose. He started off by stating that customers should have the freedom to warn others when a product doesn’t function as advertised. He also said it is unclear how common SmileDirect’s refund policy is within the healthcare space. 

Nevertheless, the nondisclosure agreement requires customers to also delete prior social media posts which expressed their dissatisfaction, he said. In addition, customers had to agree not to speak about their experience verbally with family members.

“It’s a tough agreement,” he said.

Better Business Bureau Complaints

SmileDirect has been on the receiving end of more than 1,670 Better Business Bureau complaints dating back to 2014. It should be noted that many of the complaints relate to delivery issues and not the quality of the products. However, Eavis said it is “not clear why” the company takes so long to deliver products to customers and is still a “force of frustration” among customers.

By contrast, it’s biggest rival Align Technology has seen just five complaints over more than two decades of selling similar products to customers.