In the first FTC case to challenge a company’s failure to post negative reviews, the FTC has reached a proposed settlement agreement with the online fashion retailer, Fashion Nova, LLC, prohibiting the retailer from suppressing negative reviews and requiring the company to pay $4.2 million for harm suffered by consumers.
The FTC’s administrative complaint alleges that Fashion Nova misrepresented that the product reviews on its websites accurately reflected the views and opinions of customers when, in fact, from 2015 to 2019 the retailer used a third-party customer review interface to manage reviews, publishing only 4- and 5-star reviews and filtering out hundreds of thousands of customer product reviews receiving below 4 stars. This is the second time Fashion Nova has entangled itself with the FTC. In 2020, the company paid $9.3 million to settle charges that it failed to properly notify consumers of late shipments and give them the chance to cancel their orders, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds.
In the current case, in addition to prohibiting misrepresentations of product reviews and endorsements, the FTC is requiring Fashion Nova to retroactively display all product reviews that were submitted to its website, including all reviews previously withheld from public view, for products currently for sale on their website.
The FTC’s order carves out reviews that are unrelated to Fashion Nova’s products or that contain unlawful, profane, obscene, vulgar, or sexually explicit content, so long as the criteria for withholding such reviews is applied uniformly. In addition, Fashion Nova will not be required to provide the opportunity to submit reviews for every product offered for sale on its website.
In connection with this action, the FTC sent letters to 10 third party review management companies notifying them that avoiding the collection or publication of negative reviews violates the FTC Act.
This ruling follows a continuing trend of FTC crackdowns on misleading advertising, reviews, and endorsements. Retailers should be vigilant to treat all reviews equally, solicit reviews neutrally, and responsibly outsource third-party review management. The FTC issued two new guides for businesses on soliciting reviews, one directed to marketers, the other to online platforms. These documents cover best practices for review collection, review moderation, and review publication; both should be studied carefully by retailers who incorporate consumer reviews into their marketing strategy.