AG Schwalb Announces SmileDirectClub Must Release Consumers Nationwide From Restrictive Nondisclosure Agreements

Settlement Requires Orthodontics Company to Allow Consumers Who Previously Signed NDAs to Speak Out, Change Refund Policy Nationally & Pay $500K to DC

WASHINGTON, DC – Attorney General Brian L. Schwalb today announced that SmileDirectClub, an online orthodontics company, will be required to release more than 17,000 consumers across the United States from onerous provisions in its nondisclosure agreements (NDAs) and change its refund policy for US consumers as part of a settlement resolving a consumer protection lawsuit brought by the Office of the Attorney General for the District of Columbia (OAG).

In 2022, OAG sued SmileDirectClub for unfair and deceptive practices, alleging that the company unlawfully used NDAs to silence consumers, manipulate online reviews, and hide information about the safety and effectiveness of its products from the public and from government regulators. To resolve this suit, SmileDirectClub will be required to notify consumers who previously signed NDAs that they are now free to speak about their experiences, to stop requiring consumers to sign agreements that prevent the sharing of information before providing refunds, and to pay $500,000 to the District of Columbia.

“SmileDirectClub promised a simple, safe, and affordable way to straighten teeth and touted five-star reviews—but behind the scenes, the company silenced dissatisfied consumers and buried complaints about injuries caused by its products,” said AG Schwalb. “Now, because of the effective work of the OAG legal team, SmileDirectClub can no longer use NDAs to silence consumers as a prerequisite for seeking refunds, and thousands of SmileDirectClub customers across the country will be released from gag provisions in agreements they previously signed. This litigation and settlement sends a clear message to other businesses that using NDAs to silence customer feedback can be an unfair and deceptive trade practice and a violation of DC consumer protection law.” 

SmileDirectClub, which sells clear dental aligners directly to consumers and markets them as a faster, cheaper alternative to braces, promised easy refunds to consumers. However, SmileDirectClub required almost all consumers seeking a refund to sign a restrictive NDA before they could get any money back. The NDAs used by SmileDirectClub effectively prevented dissatisfied and harmed consumers—including consumers who suffered injuries or permanent harm that required medical treatment—from publicly sharing their experiences. The NDAs prohibited most consumers from making any negative comments about SmileDirectClub or its products and required them to delete any negative reviews, social media posts, or comments they had already made. These NDAs also prohibited consumers from notifying government regulators about problems with the company’s product and required them to withdraw complaints they had already filed. Additionally, under the NDAs, consumers could not even acknowledge the existence of the agreement, and they were subject to severe penalties for violations, including fines of $10,000 per violation and threats of litigation.

In December 2022, OAG sued SmileDirectClub alleging that the company violated the District’s Consumer Protection Procedures Act by requiring consumers to sign unfair NDAs to receive refunds, misleading consumers about the safety of its products and about its refund policy, and depriving consumers of the opportunity to make fully informed purchasing decisions. Under the terms of a settlement to resolve this litigation, SmileDirectClub is required to:

  • Release 17,000+ consumers across the US from NDAs: For years, SmileDirectClub effectively silenced consumers by requiring them to sign restrictive NDAs in order to receive refunds. Now, as a result of this settlement, more than 17,000 consumers across the US will be freed from the silencing terms of these agreements. This means that the vast majority of consumers who previously signed NDAs to receive refunds from SmileDirectClub will be free to write truthful reviews of its products online, share their experiences on social media, and report problems to state and federal regulators without facing threats of penalties or lawsuits. SmileDirectClub will be required to directly notify consumers that it is waiving portions of the agreements consumers signed.
     
  • Provide refunds without requiring consumers to sign NDAs: Moving forward, SmileDirectClub will honor its refund guarantee policy and will not require consumers to sign NDAs to obtain refunds under the policy. The company will stop using agreements that block consumers from publicly sharing information about their experiences with SmileDirectClub and its products, posting reviews, or filing complaints with regulators in the vast majority of cases. (In the future, the company can only choose to impose NDAs restricting consumers’ ability to discuss their experiences with its products, namely, when customers are represented in litigation by an attorney, or receive more than $5,000 in refunds—an amount approximately two-and-one-half times the cost of the aligners.)
     
  • Pay $500,000 to the District: SmileDirectClub will be required to pay $500,000 for violating DC consumer protection laws. 

A copy of the settlement agreement is available here. 

This matter was handled by Senior Assistant Attorney General Wendy Weinberg and Assistant Attorney General Griffin Simpson, under the supervision of Adam Teitelbaum, Director of the Office of Consumer Protection.

How to Report Illegal or Unfair Business Practices
To report unfair business practices, scams, or fraud, you can contact OAG by: