The Federal Trade Commission (FTC) has fined online fashion retailer Fashion Nova $4.2 million to settle allegations that the company blocked negative reviews of its products from being posted on its website. The FTC said that this is its first case involving a company’s efforts to conceal negative reviews.
The FTC alleged in its complaint that Fashion Nova had misrepresented that the product reviews on its website accurately reflected the views of all purchasers who submitted reviews, and that in numerous instances, the company suppressed product reviews with ratings lower than four out of five stars.
The FTC stated in the complaint that Fashion Nova had installed 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 prior to posting. According to the complaint, from late 2015 until November 2019, Fashion Nova did not approve or publish hundreds of thousands of lower-starred, more negative reviews.
The FTC said that suppressing a product’s negative reviews “deprives consumers of potentially useful information and artificially inflates the product’s average star rating.”
In addition to the fine, the proposed settlement prohibits Fashion Nova from making misrepresentations about any customer reviews or other endorsements. The company must post all customer reviews of products currently being sold, including all reviews that were previously withheld from public view, except for reviews that contain obscene, sexually explicit, racist or unlawful content and reviews that are unrelated to the company’s products or customer service, delivery, returns or exchanges.
The FTC announced that it is sending letters to ten companies offering review management services, placing them on notice that avoiding the collection or publication of negative reviews violates the FTC Act. The FTC also published new guidance for online retailers and review platforms to educate them on the FTC’s key principles for collecting and publishing customer reviews in ways that do not mislead consumers.
“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.”
Why It Matters
The complaint against Fashion Nova makes it clear that the FTC considers the suppression of negative reviews to be a deceptive practice in violation of the FTC Act. The letters sent to the ten companies offering review management services underscore the FTC’s position. The letters state that the FTC is concerned when companies take improper steps to avoid collecting or publishing negative reviews. “Examples may include asking for reviews only from those likely to leave positive ones, preventing or discouraging submission of negative reviews, subjecting negative reviews to greater scrutiny, refusing to publish negative reviews, or otherwise not treating positive and negative reviews equally.”
In order to avoid possible FTC enforcement action, companies should carefully review their policies and practices to ensure that they are not engaging in these activities.