Fashion Nova must refrain from suppressing customer reviews of its products on its e-commerce site and pay $4.2 million as part of a new settlement with a U.S. federal regulator. The Federal Trade Commission (“FTC”) announced on Tuesday that it has entered into a legally-binding agreement with Fashion Nova, after accusing the fast fashion retailer of engaging in deceptive review practices, namely, by representing “directly or indirectly, expressly or by implication, that the product reviews on [its] website accurately reflect the views of all purchasers who submitted reviews of Fashion Nova products to the website” when that was not the case.
In connection with the since-settled matter, which is the first action by the FTC to center on “a company’s efforts to conceal negative customer review,” the federal regulator claims that Fashion Nova misled consumers about the nature of the reviews on its site. Specifically, the Southern California-based company invites consumers to leave product reviews on its website, where each page has a section entitled, “Reviews,” and to rate products on a five-star scale. Fashion Nova amasses these customers reviews by “sending its customers emails soliciting product reviews of the customers’ recent purchases,” and also by way of “a third-party online product review management interface, [which] allows users to choose to have certain reviews automatically post based upon their star ratings and hold lower-starred reviews for client approval prior to posting.”
Without alerting consumers, the FTC alleges that from as early as late 2015 through mid-November 2019, Fashion Nova “chose to have four- and five-star reviews automatically post to the website,” while opting “not [to] approve or publish hundreds of thousands lower-starred, more negative reviews.” As a result of these instances in which Fashion Nova allegedly “suppressed product reviews with ratings lower than four stars,” the company failed to ensure that the reviews on its site “accurately reflect the views of all purchasers who submitted reviews of Fashion Nova products to the website,” thereby, making them “false or misleading,” and a violation of Section 5(a) of the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices in or affecting commerce.
In a statement on Tuesday, Director of the FTC’s Bureau of Consumer Protection Samuel Levine said, “Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce,” noting that Fashion Nova “is being held accountable for these practices, and other firms should take note.” The same statement revealed that it is sending letters to ten unnamed companies that are in the business of offering review management services, thereby, “placing them on notice that avoiding the collection or publication of negative reviews violates the FTC Act.” Still yet, the FTC announced that it 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.
The instant action against Fashion Nova comes on the heels of the company entering into a nearly $10 million settlement with the FTC in April 2020 after the regulator alleged that did not “properly notify consumers or give them the chance to cancel their orders when [it did not] ship merchandise in a timely manner.” The FTC alleged at the time that in addition to failing to ship products within the “fast shipping” time frame it promised, Fashion Nova further ran afoul of federal law when it “did not offer customers the option to cancel [the delayed] orders, and opted to issue gift cards to compensate customers for unshipped merchandise instead of providing refunds.”
In a statement of its own, Fashion Nova asserted that the FTC’s allegations “are inaccurate and deceptive,” stating that “Fashion Nova never suppressed any website reviews, and it immediately and voluntarily addressed the website review issues when it became aware of them in 2019. Fashion Nova is highly confident that it would have won in court and only agreed to settle the case to avoid the distraction and legal fees that it would incur in litigation.”
The company continued, “The issue in this case was caused by Fashion Nova’s reliance on a reputable third-party enterprise software vendor, which offered an option to ‘autopublish’ various star ratings in a drop-down menu. Those that were not autopublished were filtered and could be individually reviewed and manually released.” At one point in time, Fashion Nova says that third-party vendor “inadvertently failed to complete this process given certain resource constraints during a period of rapid growth, [but] that issue was remedied several years ago and all previously unpublished reviews have now been posted to the extent they are actually about the product they were submitted for and do not contain profanity, do not contain threatening language, and comply with other reasonable terms.”