Fashion Nova will pay $4.2 million to settle allegations that the online retailer blocked negative customer reviews from being posted on its website, the Federal Trade Commission said Tuesday in announcing the first-of-its kind case for the agency.
The California retailer, which mostly sells its "fast-fashion" products online, suppressed reviews with ratings lower than four stars out of five, the FTC alleged in its complaint.
Fashion Nova used a third-party firm to automatically post four- and five-star reviews, but held more critical consumer takes for the company's approval, according to the agency. From late 2015 until November 2019, Fashion Nova did not approve or post the more negative reviews, which numbered in the hundreds of thousands, the FTC alleged.
Fashion Nova dismissed the FTC's allegations as "inaccurate and deceptive," saying it addressed the review issues when it became aware of them in 2019.
"All previously unpublished reviews have now been posted to the extent they are actually about the product they were submitted for and do not contain profanity, do not contain threatening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," a spokesperson said in an email to CBS MoneyWatch.
The company believes it would have prevailed in court but opted to settle the case to avoid the distraction and legal fees, the spokesperson added.
The FTC's first case involving a company's efforts to hide poor online reviews of its products should be a warning to other retailers, agency officials said.
"Deceptive review practices cheat consumers, undercut honest businesses and pollute online commerce," Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a statement. "Fashion Nova is being held accountable for those practices, and other firms should take note."
The settlement is not Fashion Nova's first with the FTC. The company in April 2020 agreed to pay $9.3 million to settle charges that it failed to let consumers cancel orders not shipped in a timely manner and that it illegally offered gift cards instead of cash for unshipped merchandise.
The FTC also said it was sending letters to 10 companies offering review management services to warn them against misleading practices.
The agency in October warned hundreds of advertisers, retailers and other businesses about posting fake reviews and misleading endorsements, noting that the rise of social media has exacerbated the problem.
"The FTC's work on customer reviews is part of its broader effort to combat deception across the ever-changing landscape of online advertising, including the increasing use of social media influencers to sell products and services," Mike Atleson, an attorney in the FTC's division of advertising practices, said in a post on the agency's site.
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