SmileDirectClub to pay nearly $5M in refunds to customers

Nearly a year after SmileDirectClub abruptly closed its operations, immediately ceasing any future sale of its products and ending its lifetime guarantee, the clear aligner company will pay $4.8 million in refunds to more than 28,000 customers for improper billing.

Customers who were reportedly told by SmileDirectClub to continue paying monthly installments for clear aligner treatment although they could no longer receive any treatment from the company will receive refunds. Some refunds will be issued automatically, and other payments will be rendered to eligible consumers who submit online refund requests, according to a press release dated December 2 from the New York State Attorney General.

"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," New York Attorney General Letitia James said in the press release. "Today, we are putting money back into people's pockets who were cheated."

Eligible customers can learn more about the refund process by visiting Healthcare Finance Direct's website.

On December 8, 2023, days after a last-ditch proposal was made to save SmileDirectClub from liquidation, the clear aligner company shuttered its operations worldwide. Despite SmileDirectClub's permanent closing, its website continued to misleadingly advise consumers, including those who had not completed their aligner treatment, that they were required to make the remaining monthly payments in full. Complaints were submitted to the New York Office of the Attorney General, triggering an investigation, and a cease-and-desist letter was sent to SmileDirectClub to stop encouraging its customers to continue making payments, according to the press release.

In September 2023, SmileDirectClub's business problems began to heat up when it filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. In that September 29 filing, SmileDirectClub had nearly $900 million in debt.

After no new buyers came forward to rescue the company, SmileDirectClub founders Jordan Katzman and Alex Fenkell in early December 2023 offered to infuse new cash into the business and take it over, to save it from liquidation.

The pair proposed offering $30 million of debt to SmileDirectClub, as well as adding $25 million of new equity into the company, in exchange for the founders receiving 100% of the reorganized firm. The $30 million would be in addition to the $20 million that the founders lent to pay for the company to search for a new buyer. However, these efforts failed, forcing the company to cease operations.

But the trouble didn't end with the business's closure. In January 2024, one of the approximately 1,000 workers who lost their jobs when SmileDirectClub shuttered its business in December 2023 filed a proposed class action lawsuit claiming that the telehealth orthodontics company failed to provide the required advance notice of their layoffs.