NEW YORK (December 2, 2024) — New York Attorney General Letitia James has announced a significant settlement recovering $4.8 million for over 28,000 consumers nationwide, including 2,265 New Yorkers, who were illegally charged by SmileDirectClub, the now-defunct telehealth company offering dental services. Despite filing for bankruptcy in September 2023 and abruptly halting its business operations, SmileDirectClub continued to charge its customers for aligner treatments, leaving thousands of people with unresolved issues and no services to show for their payments.
SmileDirectClub, once a popular online platform for at-home teeth straightening, filed for Chapter 11 bankruptcy last year and, in December 2023, announced it would cease all operations. However, the company continued to bill customers for monthly installment payments as part of its “SmilePay” program, which required payments of approximately $89 per month for aligner treatment plans that could total over $2,500.
The New York Attorney General’s Office (OAG) launched an investigation after receiving multiple complaints from consumers who had been instructed to continue making payments for services they could no longer access. Despite its closure, SmileDirectClub’s website misled customers into believing they were still obligated to pay off their outstanding balances, even though no further treatments would be provided.
Attorney General James expressed strong condemnation of the company’s actions, saying, “SmileDirectClub shut its doors for good, but illegally continued to charge New Yorkers for costly dental services. Today, we are putting money back into people’s pockets who were cheated and reminding companies that if they prey on New Yorkers, my office will step in to protect consumers.”
The settlement comes after SmileDirectClub’s payment processor, Healthcare Finance Direct, agreed to issue refunds or account credits to consumers who were wrongfully charged. Refunds will be issued automatically to eligible customers, and additional funds will be available for those who submit a request through Healthcare Finance Direct’s online platform. Consumers will be contacted by email with detailed instructions on how to claim their refunds.
The investigation also revealed that many consumers had made payments after SmileDirectClub filed for bankruptcy and after the company ceased its services. The OAG intervened in December 2023, sending a cease-and-desist letter to the company to stop instructing consumers to continue payments for services they could no longer receive. In response, SmileDirectClub made limited changes to its website but ultimately referred customers to its payment processor and the company’s lenders for resolution.
Attorney General James highlighted the importance of ensuring that consumers are not exploited, especially in the realm of healthcare services. “Dental care is expensive, and SmileDirectClub promised customers that they would provide affordable, quality care without the price tag, but instead, they extracted thousands of dollars from hardworking people,” she added.
Consumers who believe they have been affected by SmileDirectClub’s billing practices are encouraged to file complaints online with the Attorney General’s office or contact the company’s payment processor for more information about refunds. The OAG has also set up a dedicated hotline at 1-800-428-9071 for further assistance.
The investigation and settlement were led by Assistant Attorney General Christian Reigstad of the Consumer Frauds and Protection Bureau, with support from other members of the OAG team.
Background on SmileDirectClub’s Closure and Consumer Impact
SmileDirectClub, which gained national attention for its promise of affordable and convenient at-home aligner treatments, first launched in 2014. By 2019, it was valued at $8.9 billion as its stock went public. However, despite early successes, the company struggled financially and faced criticism from dental professionals for its direct-to-consumer business model, which bypassed in-person visits to orthodontists. As the company faced mounting losses, legal challenges, and growing customer dissatisfaction, its financial situation worsened, culminating in the bankruptcy filing in September 2023.
In December 2023, after canceling thousands of pending orders, SmileDirectClub confirmed it would cease all operations. This left many customers stranded mid-treatment, without customer support or clear instructions about refunds. The company’s abrupt closure sparked outrage among consumers, particularly those who had already paid for services they were no longer able to receive.
Orthodontic professionals have long raised concerns about the risks of “do-it-yourself” dentistry, noting that without professional supervision, aligners could cause long-term harm to a patient’s dental health. Critics argue that direct-to-consumer services like SmileDirectClub fail to address the complexities of individual dental needs, potentially leading to serious complications, such as gum disease or bite problems.
Despite these concerns, SmileDirectClub had a loyal following and appealed to consumers looking for more affordable options compared to traditional orthodontic care. However, as the company’s failure to provide adequate service and refund options became evident, the New York Attorney General stepped in to ensure that affected consumers were compensated for their financial losses.
For more details on the refund process or to file a complaint, affected consumers are advised to visit Healthcare Finance Direct’s FAQ page or contact the New York Attorney General’s office directly.
