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Vitacost.com - Another Scam Brewing? Print E-mail
(16 votes, average 3.63 out of 5)
Personal Finance - Investing
Written by Ahmed Amr   
Wednesday, 15 September 2010 03:28
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Is there a Vitacost scam? Back in 1987, a major stock scam unraveled when a consumer raised hell about excessive credit card charges on her carpet cleaning bill. Once her story got picked up by the Los Angeles Times, the company went into a free-fall after massive fraud was uncovered. For those of you old enough to remember, the company was ZZZZ Best which was established by celebrated boy wonder Barry Minkow. The company went public when he was nineteen and he got sentenced to 25 years for securities fraud when he was 21.

The scheme to defraud investors and consumers was simple enough. ZZZZ inflated its income and assets by over-charging customers on their credit card bills and claiming it had non-existent contracts with insurance companies to do some major clean up and refurbishing jobs.

Fast forward to 2010. A few weeks ago, a friend of mine, Charlie, noticed a few charges on his credit card statement and for vitamins he never ordered. Not one to overlook that kind of thing, he complained to his credit card company which advised him to contact the Vitacost (symbol: VITC) to reverse the charges. But the folks at Vitacost wouldn’t back down and the next thing he knew, they billed him again on the next month’s statement. My buddy contested the bill but still couldn’t get Vitacost outfit to remove the charges. He finally got ticked off and cancelled the card.

Instead of just walking away and putting the incident behind him, Charlie went snooping around to find out more about the vitamin company that was screwing with his credit card. It’s an intriguing story because Vitacost turned out to be a recent IPO that was boasting about record growth in its revenues. What made their claims all the more remarkable is that most of the companies pedaling vitamins have flat or negative growth and it’s a fairly competitive landscape.

Charlie’s experience with Vitacost was not unique. I checked some of the reviews on resellerratings.com and the feedback from customers was alarming. One customer comments “I just received a box from Vitacost for an order I did not place. I checked on their website and they charged my credit card for something I did not order. I never received an order confirmation or anything.” So maybe Charlie's story wasn't an isolated incident.

When I checked, there were 162 comments posted and the vast majority were extremely negative. These were definitely not isolated gripes by a few disgruntled customers. I picked up on a few common themes. The most common complaints were about late delivery or the failure to deliver ordered product. These were followed by delivery and double-billing of products that were not ordered and receipt of orders that were not complete. In virtually all cases, most reviewers complained about the extreme difficulty of reaching customer service by phone or email. Fairly odd for a $200 million publicly traded company that should be better run.

Some sample complaints should give you a general idea of what appears to be a company with serious internal control issues. “Their website states products are in stock and shipped within 3 days. I've been waiting 25 days and still no shipping confirmation. I sent them a cancellation e-mail. They don't respond to e-mails!” yet another writes “This is the worst company I have ever dealt with. They "confirmed" my order, but did not bother shipping it.” “I purchased 6 items valued over $100 on March 8. I received a confirmation email which contained a tracking link, but that link NEVER worked. The money was withdrawn from my account very quickly though.” ”Vitacost is the worst internet supplement supplier I have ever dealt with!" How about this comment “they always say it is a computer problem or they are upgrading their systems. They never reply to phone calls or emails, you are ignored (until you go to extreme lengths and - checkout never tells you if an item is back-ordered. They charge you again to ship back-ordered items.” Overall, their rating on ResellerRatings is a pitiful 3.5 out of 10 vs a more respectable 6.0 by better known GNC.

 

Vitacost's negativer reviews don't stop at ResellerRatings. Over at the BBB, Vitacost sports a D- rating and the complaints are of a similar nature. At RipoffReport.com a user stated, "Vitacost's poor customer service only masks their shady business practices." Over on ePinions, much of the same, "Vitacost is a scam. I shipped the protein powder back to them and paid for the shipping out of my own pocket. If that isn't bad enough, they did not credit the protein powder. I called 7 times. Each time they told me that they credited my credit card. I called my bank and was told that a credit was never issued. When I called customer service to tell them this, they hung up on me. I will never order from them again."

Vitacost went public about a year ago at 12 dollars a share and has traded as high as $13.45 in the last 52 weeks. It now trades for $6 and that’s no bargain because a publicly traded company with lack of internal controls spells trouble for both consumers and investors. Occasionally, consumer fraud and stock scams go hand in hand. What Charlie witnessed on his credit card could be a form of channel stuffing. If you will, VitaCost might be pushing its products into client’s hands to inflate sales or billing for inventory it never delivers. Even if the charges are later reversed, the company gets to report these sales as income as soon as they are charged to a customer’s credit card. I noticed that quite a few complaints came from overseas customers who won’t make six or seven international calls to get a $50 refund. A good percentage of impatient clients frustrated with making contact with customer service are likely to pay their credit card bill, chalk it up to a bad online internet experience and forget about it. If a customer complains, they hold him at bay until the issue is ‘resolved.’ The goal is to create an extended lag time between when they claim the sale as income and when they reverse it as a charge back for returned items. In the meantime, the company gets to report increasing sales to their happy stockholders. It’s a hell of a potential business model, except companies with unhappy customers don't grow for very long.

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Betty Robles |2012-02-22 14:32:39
I find the complaint above very odd because I have been buying supplements from Vitacost for many years and have never had a problem. I received a double order once, but it was my mistake. I kept the order and eventually used it. Customer service always picks up and will take back any order sent by them in error with free shipping. I've never had a problem getting a credit card refund. Their prices are much better than store prices for brand name products. I have no complaints and will continue ordering supplements from them. Many of my friends also order from them with no problems.
Janet B  - Mrs. |2012-01-02 06:18:32
I am glad I ran across this article. Had a recent unbelievable encounter with Vitacost that I would like to share. I recently wanted to purchase some Argan Oil. Looked at Vitacost and there were several different products and cost. I was particularly looking at Acure Organic Argan Oil (1oz) for $26.09. I looked at Acure Organic website to compare same product. The cost is $14.99. When I chatted with someone from Vitacost about the discrepancy, they indicated that was the lowest price they could offer. Hmmmm! I then looked at website The Drugstore. Low and behold it was the same price as the Acure Organics website $14.99. Check it out. I am not lieing. Looks like Vitacost is making a whopping profit of $11.00 on one small product. I personally will not do business with them any more and neither should anyone else if they are smart and don't want to throw their money away.
some lady |2011-11-11 08:51:31
i just checked the BBB rating and they have an A+ rating. I have used them off and on for a few years and I have never had a problem with them. This person doesn't know what they are talking about.
Gary F |2011-10-10 05:14:47
Ive been using vitacost for almost a year now with zero problems. I just ordered a vitamin yesterday(Sunday) and this morning(Columbus Day) my shipping info. and tracking number arrived. Never any fraudulent charges, they either did a 180 in their business or they're false accusations from a competitor? Thanks Vitacost!
Fussy Consumer  - Extremely Satisfied Customer |2011-09-30 20:21:18
I've been using them for years with never a problem. I did some research before my first order and found them to be one of the more reliable and trustworthy companies. I use their automatic shipment feature and it works perfectly and with no fraudulent charges. I find their prices much more reasonable than the big supplement chain found in almost every mall in the US. I also prefer Vitacost's products.
Jennifer |2011-09-22 12:56:09
I have been a monthly customer of Vitacost since 2002 and NEVER had a problem as you have described and never heard of this issue with them before. Hanes is a company that I used to order from online, but after the last few orders of wrong items, items not included, overcharges and non responding customer service, I filed a complaint & stopped shopping with them, I won't even buy their items in a store. I am not the only person who had problems with them, but I wouldn't call it a scam.
Jozef Horsky  - Mr |2011-08-10 15:31:21
I do not have a good experience with VitaCost. I ordered supplements 5 weeks ago, and I am still waiting for the delivery. The claimed delivery for international orders is 7-14 days. I contacted their customer service several times. The first time they asked me to wait for a month and then check with Australian Customs. I did this, also checked with Australian Post - to no avail. The Australian Post asked me for a tracking number so they could trace the parcel (to confirm if the goods were actually shipped and where they got "stuck"). I contacted Vitacost and they told me that they do not have the tracking number. Not sure where to go from here, but my instinct is to cancel my credit card.
Jozef Horsky  - hindsight |2012-02-22 15:29:03
I did receive my shipment shortly after my previous negative post. As it turned out, the order in question has been despatched promptly, but it was delayed en route, which was outside of Vitacost's control. Since then, I went ahead with another order, and the delivery was hassle-free and fast. I have changed my opinion of Vitacost and this post is to reflect my restored confidence in them. I was a bit harsh with my previous criticism in blaming them for delays they had no control over. I continue using them now. Apology JH.
Mary Hilliard  - Extremely satisfied with Vitacost |2011-07-30 09:57:14
I have NEVER had one problem with Vitacost in the 8 years of doing business with them! I order several products for my husband and myself from them about 4 times per year. Their service has always been curteous, prompt and accurate, with never any shipping or billing problems.
Lori  - Happy Customer for Years! |2011-07-24 14:08:43
Thrilled with vitacost! Always good customer service! Always answer the phone! Very Helpful....someone has their sites mixed up! Vitacost.com is a great place & my orders always come in 5 days or less!!
Judith  - Satisfied new customer |2011-07-17 16:19:47
I've just discovered the Vitacost site and have placed two orders in the last month. I was flabbergasted to find that the order arrived within a week, as shipping to Alaska is always problematic.

And as the other poster mentioned, my charges show us as Vitacost.com with their 800 number after it. I intend to continue getting my groceries from them as they are much cheaper than the stores here, even with the shipping charges.
 
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