Online retailer Fashion Nova will pay $4.2 million to settle a Federal Trade Commission (FTC) case alleging the company blocked negative reviews of products on its site, the commission said Tuesday.
It is the first case brought by the FTC involving a company’s efforts to conceal negative customer reviews, and along with the settlement the commission released new guidance for online retailers regarding collecting and publishing customer reviews in a way that doesn’t mislead consumers.
The FTC alleged that the California-based retailer used a third-party online product review management interface to automatically post four and five star reviews, and to hold lower starred reviews for the company’s approval.
According to the complaint, Fashion Nova didn’t approve or post hundreds of thousands of lower starred and negative reviews between late 2015 and November 2019.
“Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “Fashion Nova is being held accountable for these practices, and other firms should take note.”
In addition to the $4.2 million payout, the settlement requires Fashion Nova to post all customer reviews of products being sold on its website, with the exception of reviews that contain obscene or other unlawful content.
Fashion Nova denied the FTC’s allegations, calling them “inaccurate and deceptive.”
“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 said in a statement.
Fashion Nova said that “at one point in time, the company inadvertently failed” to manually release reviews that were not auto published “given certain resource constraints during a period of rapid growth.”
“That issue was remedied several years ago and all previously unpublished reviews have now been posted to the extent they are actually about the product they were submitted for and do not contain profanity, do not contain threatening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,” the statement added.
Along with the settlement for Fashion Nova, the FTC is also sending letters to 10 companies that offer review management systems. The letter tells the company to review its policies and practices to make sure it is not engaging in any “improper” steps to allow companies to avoid collecting or publishing negative reviews.
This is the second case the FTC has brought against Fashion Nova in recent years. In April 2020 Fashion Nova agreed to pay $9.3 million to settle allegations that the company failed to properly notify consumers and give them a chance to cancel orders when it failed to ship products in a timely manner.