Saturday, July 20

SmileDirectClub Shuts Down, Months After Filing for Bankruptcy

SmileDirectClub, a telehealth company that sold teeth-straightening devices through the mail and faced criticism from medical groups, said on Friday that it had shut down.

The company, founded in 2014, sold teeth aligners online and in its shops for $1,850. It marketed them as a faster, cheaper alternative to braces. SmileDirectClub’s initial public offering in 2019 valued it at $8.9 billion.

SmileDirectClub served more than two million customers over nearly a decade. But the company was not profitable and filed for Chapter 11 bankruptcy in September with nearly $900 million of debt, court filings and financial statements show. And this year, it settled a lawsuit from the District of Columbia attorney general’s office that had accused the company of using confidentiality clauses to stifle consumer criticism.

On Friday, SmileDirectClub said on its website that it was shutting down its global operations immediately. It apologized to customers for the inconvenience, and urged them to consult a doctor or dentist about future treatment.

Outstanding orders have been canceled, the company said. Customers on a monthly installment payment plan are expected to continue making all of their payments. Those who have completed treatment will no longer qualify for the free touch-ups that the company had guaranteed.

For customers seeking refunds, SmileDirectClub said that it would have more information “once the bankruptcy process determines next steps.”

SmileDirectClub was founded in Nashville by childhood friends Alex Fenkell and Jordan Katzman. To order its products, customers made a mold of their teeth at home with a kit mailed by the company or had their teeth scanned at a “SmileShop” retail location. The scans were reviewed by dentists and orthodontists in the company’s network.

SmileDirectClub’s services, which did not require in-person visits, had drawn criticism from dentist and orthodontist groups. The company has sued some of those critics and accused California’s dental board of stifling competition.

After going public, the company’s shares traded at about $18 apiece but later became a penny stock. As the company failed to turn a profit, it also dealt with legal fights throughout its existence and dissatisfied customers who accused it of false advertising and of violating Food and Drug Administration regulations.

SmileDirectClub offered refunds within 30 days after its aligners arrived, but anything after that was considered outside the company’s official refund policy and came with a nondisclosure provision, The New York Times reported in 2020. The agreement prohibited customers from telling others about the refund and required them to delete negative social media posts and reviews.

The District of Columbia attorney general’s office sued the company in 2022, accusing it of blocking customers who had been harmed by its products from filing complaints with regulators or law enforcement. Under a settlement to resolve the litigation earlier this year, SmileDirectClub was required to release more than 17,000 customers from the agreements and pay $500,000 to the district. The company said in the settlement that it had not violated the law or engaged in unfair or deceptive practices.