Online reviews have been around for more than two decades and have been subject to all kinds of manipulation and whitewashing without much in the way of action from the Federal Trade Commission, the nation's primary consumer protection agency.
That has now changed. Fashion Nova, LLC will have to pay $4.2 million and agree not to block negative reviews from being posted to its website.
Two years ago, Fashion Nova agreed to pay $9.3 million to settle allegations that it failed to properly notify consumers and give them the chance to cancel their orders when it didn't ship merchandise in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds.
The Los Angeles-based company has five retail stores throughout Southern California and a heavy online presence. It describes itself as "a pop culture phenomenon, reaching staggering social media followings of over 25 million, of which [sic] includes celebrity fans and collaborators."
Misrepresented product reviews
In the latest case, the FTC charged in a complaint that the California-based "fast fashion" retailer misrepresented that the product reviews on its website reflected the views of all purchasers who submitted reviews, when in fact it suppressed reviews with ratings lower than four stars out of five.
The case is the FTC’s first involving a company’s efforts to conceal negative customer reviews.
“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.”
Third-party "review management"
The FTC charged that Fashion Nova used 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.
But from late 2015 until November 2019, Fashion Nova never approved or posted the hundreds of thousands of lower-starred, more negative reviews.
"Suppressing a product’s negative reviews deprives consumers of potentially useful information and artificially inflates the product’s average star rating," the FTC said in a news release.
The FTC said it is sending letters to 10 companies offering review management services, placing them on notice that avoiding the collection or publication of negative reviews violates the FTC Act. In addition, the FTC 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.
All relevant reviews must be posted
Under the proposed settlement of the latest allegations, Fashion Nova will pay $4.2 million for harm consumers incurred. Fashion Nova will also be prohibited from making misrepresentations about any customer reviews or other endorsements.
In addition, it must post on its website all customer reviews of products currently being sold—with the exception of reviews that contain obscene, sexually explicit, racist, or unlawful content and reviews that are unrelated to the product or customer services like shipping or returns.