FTC’s first case involving a company’s efforts to conceal negative customer reviews
(FTC) – Online fashion retailer Fashion Nova, LLC will be prohibited from suppressing customer reviews of its products and required to pay $4.2 million to settle Federal Trade Commission allegations that the company blocked negative reviews of its products from being posted to its website.
The FTC alleged in a complaint that the California-based retailer, which primarily sells its “fast fashion” products online, misrepresented that the product reviews on its website reflected the views of all purchasers who submitted reviews, when in fact it suppressed reviews with ratings lower than four stars out of five.
The case is the FTC’s first involving a company’s efforts to conceal negative customer reviews.
“Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
“Fashion Nova is being held accountable for these practices, and other firms should take note.”
According to the FTC’s complaint, Fashion Nova used a third-party online product review management interface to automatically post four- and five-star reviews to its website and hold lower-starred reviews for the company’s approval.
But from late-2015 until November 2019, Fashion Nova never approved or posted the hundreds of thousands of lower-starred, more negative reviews. Suppressing a product’s negative reviews deprives consumers of potentially useful information and artificially inflates the product’s average star rating.
The FTC also announced that it is sending letters to 10 companies offering review management services, placing them on notice that avoiding the collection or publication of negative reviews violates the FTC Act.
In addition, the FTC has released new guidance for online retailers and review platforms to educate them on the agency’s key principles for collecting and publishing customer reviews in ways that do not mislead consumers.
This is the second case the FTC has brought against Fashion Nova in recent years.
In April 2020, the FTC announced that Fashion Nova agreed to pay $9.3 million to settle allegations that the company failed to properly notify consumers and give them the chance to cancel their orders when it failed to ship merchandise in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds.
Under the proposed settlement of the latest allegations, Fashion Nova will pay $4.2 million for harm consumers incurred. Fashion Nova will also be prohibited from making misrepresentations about any customer reviews or other endorsements.
In addition, it must post on its website all customer reviews of products currently being sold—with the exception of reviews that contain obscene, sexually explicit, racist, or unlawful content and reviews that are unrelated to the product or customer services like shipping or returns.
The Commission is committed to ensuring that consumers and honest businesses are not cheated by dishonest review practices. In October, the Commission warned more than 700 businesses that they could incur significant civil penalties if they use reviews or other endorsements in ways that were found to be unlawful in prior FTC administrative cases.
The Commission voted 4-0 to issue the proposed administrative complaint and to accept the consent agreement with the company.
The FTC will publish a description of the consent agreement package in the Federal Register soon.
The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice.
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