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 complaintthat 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 lettersto 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 guidancefor 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 settlementof 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 endorsem*nts. 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 endorsem*nts 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. Once processed, comments will be posted on Regulations.gov.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.
As an expert in online commerce, consumer protection, and the regulation of customer reviews, I can attest to the significance of the Federal Trade Commission's (FTC) actions against Fashion Nova, LLC. The case highlights the deceptive practices employed by the California-based online fashion retailer, particularly in suppressing negative customer reviews to present a more favorable image of its products.
The evidence presented by the FTC reveals that Fashion Nova used a third-party online product review management interface to selectively post four- and five-star reviews while withholding lower-starred reviews for the company's approval. This automated process occurred from late 2015 until November 2019, during which Fashion Nova failed to approve or post hundreds of thousands of lower-rated, more critical reviews. By doing so, the company misled consumers by creating an inflated average star rating for its products.
The consequences of suppressing negative reviews are significant. Consumers rely on reviews to make informed purchasing decisions, and by concealing negative feedback, Fashion Nova deprived its customers of potentially valuable information. This not only harms consumers but also undermines honest businesses by creating an uneven playing field in the online marketplace.
The FTC's Director of the Bureau of Consumer Protection, Samuel Levine, emphasized the seriousness of deceptive review practices, stating that they "cheat consumers, undercut honest businesses, and pollute online commerce." The $4.2 million settlement reflects the harm caused to consumers, and Fashion Nova is also prohibited from making misrepresentations about customer reviews or endorsem*nts in the future.
It is noteworthy that this is not the first case the FTC has brought against Fashion Nova. In April 2020, the company agreed to a $9.3 million settlement related to allegations of failing to notify consumers about delays in shipping and using gift cards instead of providing refunds for unshipped merchandise.
The FTC's broader actions, such as sending letters to 10 companies providing review management services and releasing new guidance for online retailers and review platforms, demonstrate the Commission's commitment to addressing deceptive review practices across the industry. The guidance aims to educate businesses on key principles for collecting and publishing customer reviews in ways that do not mislead consumers.
In conclusion, the FTC's actions against Fashion Nova underscore the importance of transparency and honesty in online commerce, especially in the realm of customer reviews. The proposed settlement, if finalized, will serve as a precedent for holding businesses accountable for deceptive practices and protecting consumers from misleading information.
