NEW YORK — A year after SmileDirectClub ceased operations, many of its former customers are finally receiving some compensation. New York Attorney General Letitia James has announced the recovery of $4.8 million, which will be distributed to over 28,000 affected consumers who were charged illegally by the company after it shut down.
“Dental care is costly, and SmileDirectClub assured customers of providing affordable and quality services,” stated James in a formal announcement. “However, the reality was that they took thousands of dollars from hardworking individuals. Today, we are working to return money to those who were misled.”
Once a publicly traded entity known for offering clear dental aligners, SmileDirectClub closed its doors in December 2023, shortly after filing for Chapter 11 bankruptcy. The company abruptly canceled all pending orders and declared that its “Lifetime Smile Guarantee” was no longer valid. Amidst the chaos, customers were informed that those under the “SmilePay” program were still required to make payments, which led to significant confusion and dissatisfaction among its clientele.
According to the announcement, most affected customers had utilized the “SmilePay” program, which typically involved a financial commitment exceeding $2,500 through initial and subsequent payments for aligner treatments.
Following the company’s closure, customers began filing complaints about being forced to continue their monthly payments without receiving any services in return. This prompted James’ office to send a cease-and-desist notice to SmileDirectClub. In an effort to respond, SmileDirectClub redirected inquiries to HPS Investment Partners, representing its secured lenders, as well as Healthcare Finance Direct, which managed SmilePay. The company also updated its online FAQ to eliminate any mention of ongoing payments, redirecting customers to HFD for further assistance.
The settlement agreement will allow affected consumers to receive either partial or full refunds of their installment payments or reduced future payment obligations. The amount they are awarded will depend on various considerations, such as when they first began using the aligners, whether their treatments had commenced, how much of the treatment was completed before the company went under, and the outstanding balances on accounts.
It’s important to note that not all refund distributions will be in the format of a check. Compensation will first be applied to any existing balances, so while future payments may be lower, some customers may still owe amounts if they were further along in their treatment. For those eligible for refunds that exceed their outstanding balance, that extra money will be returned through the bank account, debit card, or credit card associated with their account. If those attempts fail, HFD indicates that a physical check will then be mailed.
The number of individuals who ultimately register for the settlement will also influence the distribution amounts. The total compensation is limited to $4.8 million, meaning refunds could vary based on the total number of requests received.
Some refunds will be processed automatically, while others will require customers to submit a direct request to HFD. The deadline for this request is March 31, 2025. Eligible customers can expect to be contacted via email by HFD for further instructions, and additional information might also be available on the service provider’s official site.
Prior to its demise, SmileDirectClub had served over 2 million customers since its inception in 2014, marketing clear dental aligners as a quicker and more affordable solution compared to traditional braces, sold through mail and major retailers. However, it struggled with profitability annually and reported close to $900 million in debt by the time it filed for bankruptcy in September 2023.
Beyond its financial difficulties, dental organizations globally have raised concerns about direct-to-consumer aligner services—often referred to as “DIY” dentistry—due to the risks associated with not having in-person consultations with dental professionals. This criticism intensified especially after customers faced service lapses last year, despite the existence of other companies still offering similar aligner services today.