Sephora Hit With Class Action Alleging Discrimination

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Four Chinese women have filed a class action lawsuit against Sephora USA, Inc. and its parent company LVMH Moet Hennessy Louis Vuitton Inc. for allegedly discriminating against Asian customers while shopping online out of fear that they might abuse a recent sale.

“Specifically, Sephora has blocked and/or deactivated accounts of customers of perceived Chinese/Asian descent based on the ill-founded and discriminatory belief that all Chinese/Asian customers abuse discount sales to engage in bulk purchasing for re-sale,” the Sephora class action lawsuit states.

Plaintiffs Xiao Xiao, Jiali Chen, Man Xu, and Tiantian Zou all claim that they were members of Sephora’s Beauty Insider program and Sephora customers.

The Beauty Insider program is a rewards based system in which customers can rack up points for each dollar they spend either at a Sephora brick and mortar store or online. If a customer spends at least $350 in one calendar year, he or she can become a Very Important Beauty Insider, or VIB. If a customer spends $1,000 in a calendar year, he or she becomes a VIB Rouge member.

With each additional tier insiders are given “access to exclusive gifts, event invitations, and early access to select products.” VIB Rouge members are given even greater rewards.

Sephora offers a sale each year that last five days in which VIB and VIB Rouge customers are given a 20 percent discount on all their purchases they make either in a Sephora store or online.

Sephora held one of these special sales from Nov. 6-10. All customers had to do to receive the discount was present the discount offer the customer received in the mail or in an email.

If making a purchase online, VIB customers are given a special promotional code to enter when checking out. As part of this process, customers are given the option of sharing the sale with a friend during the five-day period, but that person is only able to purchase one item with the discount. If in a Sephora store, that person has to be with the customer. If online, an invitation is sent to the friend via email.

On Nov. 6, when the sale began, Sephora’s website crashed, which was up and running by the same evening. On Nov. 7, Sephora explained on its Facebook page that the website crashed due to a high volume of traffic because of “high levels of bulk buys for reselling purposes in North America and other countries,” the Sephora class action lawsuit explains.

The company explained in the statement that “in an effort to restore website functionality, some of our loyal North American and international customers were temporarily blocked,” adding that the company “de-activated accounts due to reselling — a pervasive issue throughout the industry and the world.”

Sephora said that it “identified certain entities who take advantage of promotional opportunities to purchase products in large volume.”

According to the Sephora class action lawsuit the accounts that were blocked or deactivated were accounts that had email addresses with Chinese or Asian sounding names. The company also blocked customers that were “using web domains originating in China” and other Asian countries such as qq.com, 126.com and 163.com.

However, the plaintiffs allege that once the website was restored “more than 95 percent of these blocked and deactivated accounts belonged to individuals residing in the United States,” who were neither buying in bulk or planning to resell the items they purchased.

They also explain that they weren’t even in the highest VIB tier. They also claim that other “Beauty Insider customers who had basic membership only” were also blocked from making purchases online.

“Clearly, customers who failed to purchase even $350 worth of items in a calendar year were not involved in ‘bulk purchases’ or retail re-sales of Sephora products,” the discrimination class action lawsuit explains.

The plaintiffs claim that they have not been given an explanation why Chinese or Asian customers had their accounts blocked, while non-Asians did not.

They also claim that while Sephora offered a customer service hotline and email address that customers could use if their accounts were erroneously shut down, any attempts “to receive assistance from Sephora customer service were fruitless.”

In addition, if a customer had their VIB account deactivated, he or she also lost all reward points.

Each of the plaintiffs allege that they had their accounts deactivated and missed out on the sale and lost out on accumulated reward points.

They are charging Sephora with violating discrimination laws and breach of contract. They are asking for compensatory and punitive damages.

Sephora issued a response to the class action lawsuit, which was filed on Nov. 18, saying that “this lawsuit significantly distorts the facts in this matter.”

The plaintiffs are represented by Douglass H. Wigdor, David E. Gottlieb, and Elizabeth Chen of Wigdor LLP and by Jeanne Christensen of Imbesi Christensen.

There is not attorney information availabel for Sephora at this time.

The Sephora Class Action Lawsuit is Xiao Xiao et al. v. Sephora USA, Inc. et al., Case No. 14-cv-9181, in the U.S. District Court for the Souther District of New York.