SmileDirectClub, the D2C aligners company, has decided to shut down after filing for Chapter 11 bankruptcy protection. The announcement of the global operations winding down came abruptly, conveyed through a note on the company’s website on December 8th. This move follows closely on the heels of SmileDirectClub’s filing for Chapter 11 bankruptcy protection less than three months ago.
The sudden shutdown has left some customers with concerns about completing their ongoing treatment plans and addressing outstanding bills. Unfortunately, those seeking information are met with a notice on SmileDirectClub’s website stating that customer care support is no longer available for existing customers. The company expresses regret for any inconvenience caused by this situation.
Key Takeaways:
- Financial Struggles and Chapter 11 Bankruptcy: SmileDirectClub’s recent decision to close down has come after facing difficulties and filing for Chapter 11 bankruptcy protection. This highlights the company’s struggle to secure capital for operations. The challenges were further compounded by a decline in stock value being delisted from the Nasdaq and a consistent lack of profitability.
- Divergence from Medical Guidance and Legal Issues: The downfall of SmileDirectClub can be attributed to their deviation from expert guidance regarding teeth alignment and their choice to go public in 2019, which resulted in debt accumulation. Legal issues such as a patent dispute, regulatory obstacles, and a settlement over practices have also added to the company’s struggles in maintaining its position within the industry.
- Impact on Customers: The sudden shutdown has left customers uncertain about treatments and outstanding bills. With customer support and aligner treatments being discontinued as pending orders being canceled, customers are understandably concerned about finding alternative solutions and possible refunds.
- Consumer Rights and Refund Options: Customers are advised to explore refund options through credit or debit card providers, emphasizing the urgency of the situation. Suggestions include seeking chargebacks for payments made for services that are no longer provided and for credit card payments exceeding £100, considering a ‘section 75’ claim with the credit card provider.
- Legacy of SmileDirectClub: The closure of SmileDirectClub signifies a shift in its journey as a pioneer in the consumer ‘Invisible’ teeth aligners market. Once known for providing an affordable way to achieve healthy teeth, the company has faced various challenges, including legal disputes and financial difficulties. As a result, they have had to discontinue their services, including their lifetime smile guarantee.
Background
Founded in 2014 by childhood friends Jordan Katzman and Alex Fenkell, SmileDirectClub entered the stock market with an IPO in 2019 with a valuation of $8.9 billion. Post-IPO, the company’s stock initially soared to over $18, only to later experience a decline, eventually becoming a penny stock and getting delisted from the Nasdaq.
While as a publicly traded entity, SDC faced challenges in turning a profit and grappling with lowering revenues. The company found itself entangled in a patent dispute with rival platform Candid, a legal battle that was eventually dismissed by a judge. Regulatory hurdles further complicated matters, and the company contended with disgruntled customers who accused it of false advertising and violations of FDA regulations.
So What Exactly Happened Behind The “Invisible Aligners”
SmileDirectClub, renowned for its clear aligners allowing at-home dental molds and online check-ups, has closed down, causing uncertainty among customers about the fate of their ongoing dental treatments. The orthodontics company, based in the US, offered an alternative approach with clear aligners, eliminating the need for in-person appointments.
Typically priced at around £1,800, the aligners provided a 4 to 6-month treatment duration. However, customers are now facing ambiguity as SDC has announced the incredibly difficult decision to wind down its global operations. The US-based company filed for Chapter 11 bankruptcy in late September, securing protection from creditors owed substantial amounts, totaling nearly $900 million in debt at the time of the bankruptcy filing.
Despite an extensive search spanning several months, SmileDirectClub revealed its inability to secure a partner willing to inject sufficient capital to sustain the company. The quest for financial support comes on the heels of the company’s public debut in 2019, where it boasted an $8.9 billion valuation. However, over time, its stock value plummeted, revealing consistent unprofitability and entanglement in numerous legal battles. In 2022, SDC reported a significant loss of $86.4 million.
Since its inception in 2014, SDC had an ambitious mission to revolutionize oral care by offering clear dental aligners directly to consumers through mail and major retailers, positioning them as a faster and more affordable alternative to traditional braces. Having served over two million people, the company faced not only financial challenges but also encountered resistance from both the medical community and legal entities.
The main reason for the downfall is said to be the divergent path the company took from the guidance provided by medical experts in the field of teeth alignment. In 2019, they made the decision to go public, a move that resulted in the accumulation of substantial debt. Despite having open orders, the company has, unfortunately, ceased all customer service operations. This situation has left customers with pending orders without the support they may require.
In a notable legal dispute, the District of Columbia attorney general’s office also sued SDC for deceptive practices, accusing the company of using NDAs to manipulate online reviews and prevent customers from reporting negative experiences to regulators. While SmileDirectClub denied the allegations, it settled in June, releasing over 17,000 customers from NDAs and agreeing to pay $500,000 to the District of Columbia. This legal episode added to the challenges the company faced in maintaining its foothold in the industry.
But What About Your Treatment And Deposits With SmileDirectClub?
If you’re currently undergoing treatment with SDC, the company has conveyed that aligner treatment is no longer available through their platform. During this change, SDC apologizes for any inconvenience caused and advises individuals in active treatment to contact a local dentist. For those wishing to continue their treatment outside the SDC platform, the recommendation is to consult with the treating doctor or a local dentist for guidance on future aligner treatment.
Additionally, SmileDirectClub has discontinued its previously offered lifetime smile guarantee, and customers with existing payment plans are expected to continue making payments. However, the company has not yet disclosed the process for customers seeking refunds.
Consumer rights experts suggest exploring the possibility of claiming a refund through credit or debit card providers. In situations where a company is facing financial challenges, acting promptly becomes crucial. Customers are advised to contact their card provider immediately, seeking a chargeback for the payments made for the service that is no longer provided. It is essential to emphasize the urgency of the situation, explaining that the business is undergoing financial difficulties and swift action is necessary.
While refunds may not be possible for services paid for some time ago, initiating the request promptly is recommended. For those who made payments in full or in part using a credit card and the transaction exceeded £100, there is an option to potentially reclaim the money through a ‘section 75’ claim with the credit card provider. If you used a different payment method, you likely won’t receive a refund unless the liquidators present an alternative solution for you. The company has also ‘regretfully’ canceled all aligner orders that have not yet been shipped.
About SmileDirectClub
SmileDirectClub, less than a less-than-a-decade-long aligner company, was a pioneer in providing remote teeth straightening at a cost that’s 60% lower than traditional braces. As the first and most widely recognized brand in the “at-home aligners” section, they offer a convenient and budget-friendly approach to achieving aligned teeth.
With SDC, In contrast to traditional metal braces and Invisalign treatment, there was no need for frequent visits to a dentist or orthodontist for bi-weekly checkups. Instead, you can conveniently take virtual scans from the comfort of your home every few weeks to ensure your teeth are progressing correctly. SmileDirectClub collaborated with registered dentists, orthodontists, and doctors, ensuring that each treatment case runs effectively and smoothly.
Conclusion
SmileDirectClub’s abrupt shutdown following its recent Chapter 11 bankruptcy filing, has left customers in a state of uncertainty regarding ongoing treatments and outstanding bills. The company’s trajectory, from a promising IPO to financial struggles and legal battles, ultimately led to its inability to secure sufficient capital for sustainability.
For customers affected by this closure, seeking refunds through credit or debit card providers is advised. The discontinuation of services and the cancellation of pending orders underscore the challenges faced by the once-prominent D2C aligners company, marking a significant turn in its less-than-a-decade-long journey.
