FTC Fines Fashion Company $4.2 Million For Blocking Negative Customer Reviews | Arent fox

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The FTC’s recent allegations with Fashion Nova

Fashion Nova, LLC, is a California-based “fast fashion” retailer that describes itself as “the world’s leading fast-to-market apparel and lifestyle brand.” The company operates an e-commerce platform, as well as a handful of physical locations, and has a major social media presence, including more than 25 million subscribers and partnerships with celebrities like Cardi B, Megan Thee Stallion, Justin Bieber. , and Kendall Jenner.

In its allegations against Fashion Nova, the FTC alleges that Fashion Nova misled its customers in violation of Section 5 of the US FTC Act by blocking negative customer reviews of its products. Specifically, a recent FTC press release states that the retailer “misrepresented that product reviews on its website reflected the opinions of all shoppers who submitted reviews, when in fact it removed reviews with ratings less than four out of five stars.”

In the complaint, the FTC calls out Fashion Nova for its comment review framework. Specifically, Fashion Nova used a third-party online review system that automatically posted four- and five-star reviews to the website, but retained less-starred reviews for corporate approval. However, the company has never endorsed or published the hundreds of thousands of less starred reviews. To settle the allegations, Fashion Nova has agreed to pay just over $4 million and will be required to post all reviews of products currently sold on its website. This isn’t Fashion Nova’s first encounter with the FTC. In April 2020, he had to pay $9.3 million for failing to ship products in a timely manner and illegally issuing gift cards in lieu of refunds.

FTC issues new guidelines for online retailers

In addition to the settlement with Fashion Nova, the FTC also recently issued guidance on handling customer reviews that online retailers should carefully consider. According to “Solicit and pay for reviews online” advice, retailers are encouraged to carefully consider the processes by which reviews are collected and published. When collecting reviews, companies should not prevent, discourage or intimidate people from submitting negative reviews. Businesses shouldn’t just ask for reviews from people who will leave positive reviews, either. Additionally, the FTC encourages companies to have “reasonable processes in place to verify that reviews are genuine and not false, misleading, or otherwise manipulated” and to treat positive and negative reviews equally. Finally, for review of postings, FTC staff encourages companies to post all notices and not to display notices in a misleading manner.

Main Takeaway

Businesses need to educate their digital marketing and website management teams. Tampering with reviews is prohibited by the FTC and may be considered an unfair or deceptive trade practice in violation of FTC law. Retailers are encouraged to review their existing practices to ensure compliance.

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