Fashion Nova will pay $ 4.2 million as part of the settlement of FTC claims to block negative product reviews
Online fashion retailer Fashion Nova, LLC will be banned from suppressing customer reviews of its products and ordered to pay $ 4.2 million to settle the Federal Trade Commission’s allegations that the company blocked negative reviews of their products from being posted on the site.
The FTC claimed in a complaint that the California-based retailer, which primarily sells its “fast fashion” products online, misrepresented that product reviews on their website reflected the views of all buyers who submitted reviews, while in fact suppressing reviews with ratings lower than four stars out of five. The case is the FTC’s first to involve a company in its efforts to conceal negative customer reviews.
“Misleading rating practices cheat consumers, undermine honest businesses and pollute online commerce,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Fashion Nova is being held responsible for this practice, and other companies should take note.”
According to the FTC’s complaint, Fashion Nova used a third-party interface for managing product reviews online to automatically post four- and five-star reviews on the site and hold lower-star reviews for company approval. But from the end of 2015 to November 2019, Fashion Nova has never approved or published hundreds of thousands of lower stars, more negative reviews. Suppressing a product’s negative reviews deprives consumers of potentially useful information and artificially increases the product’s average star rating.
The FTC also announced that they are sending letters to 10 companies offering rating management services, informing them that it is against FTC law to avoid collecting or publishing negative reviews. In addition, the FTC has issued new guidance for online stores 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 filed against Fashion Nova in recent years. In April 2020FTC announced that Fashion Nova agreed to pay $ 9.3 million to settle allegations the company failed to properly notify consumers and give them the opportunity to cancel their orders when it failed to ship goods on time, and that it illegally used gift cards to compensate consumers for goods not shipped instead of giving refunds.
Under the proposed settlement According to the latest claims, Fashion Nova will pay $ 4.2 million for damages consumers have sustained. Fashion Nova will also be prohibited from making incorrect representations about customer reviews or other recommendations. In addition, it must post all customer reviews of products currently being sold – with the exception of reviews that contain obscene, sexually explicit, racist or illegal content and reviews that are not related to the product or customer services such as shipping or return. .
The Commission is committed to ensuring that consumers and honest businesses are not cheated by dishonest assessment practices. In October, the commission warned more than 700 businesses that they could incur significant civil penalties if they used reviews or other endorsements in ways that were found to be illegal in previous 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 soon publish a description of the consent agreement package in the Federal Register. The agreement will be subject to public comment for 30 days after publication in the federal register, after which the commission will decide whether the proposed consent order will be made final. Instructions for comment will appear in the published announcement. Once processed, comments will be posted on Regulations.gov.
NOTE: The Commission sends an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears that a case is in the public interest. When the Commission issues a consent order on a final basis, it has the force of law with regard to future actions. Any breach of such an order may result in a civil penalty of up to $ 46,517.