In a class action lawsuit filed on November 18, 2014 in New York federal court, four customers of Sephora, one of the largest retail cosmetics chains worldwide, claim that they and fellow consumers of Chinese/Asian descent were discriminated against based on ill-founded stereotypes that all Chinese/Asian customers abuse discounts to engage in bulk purchasing for re-sale. The case is entitled Xiao, et al. v. Sephora USA, Inc., et al., Civil Case No. 14-cv-9181, in the Federal District Court for the Southern District of New York (the “New York Class Action”). The lawsuit alleges that during a large discount offer, the Plaintiffs and thousands of other Chinese/Asian customers had their Sephora Beauty Insider accounts (a consumer rewards program) suspended while customers who were not perceived to be Chinese/Asian retained access to their accounts.  On November 28, 2014 in California federal court, three additional customers of Sephora also filed a lawsuit, alleging the same discriminatory treatment described in the New York Class Action.

The lawsuits allege that Sephora customers of Chinese/Asian descent across the country who were members of the company’s “Beauty Insider” loyalty account rewards program, particularly at the “Very Important Beauty Insider” (“VIB”) and the “VIB Rouge” levels, were singled out for discriminatory treatment. According to the Complaints, Sephora hosted an annual sale that took place between November 6 through 10, 2014, where it offered VIB and VIB Rouge members an exclusive 20% off discount. After a “website crash,” Sephora inexplicably removed that status from members of Chinese/Asian descent, precluding those members from taking part in the sale upon allegations of “bulk buying” or “retail re-selling.”

The suits further allege that VIB and VIB Rouge member customers whose accounts were not associated with Chinese/Asian web domains or customers with surnames that did not appear to be Chinese/Asian remained open. According to the Complaints, customers of Chinese/Asian descent at all levels of Beauty Insider membership had their accounts blocked or deactivated, resulting in losses of points that members could exchange for products. The lawsuit alleges that the blocking and/or deactivation of specific customer accounts based on the actual or perceived race/ethnicity of the accountholder was not related in any meaningful way to the restoration of website functionality.