(ABC4) – California-based online retailer Fashion Nova will have to pay $4.2 million as part of a settlement of allegations related to blocking negative reviews of its products.
The settlement is part of claims made by the Federal Trade Commission (FTC) alleging that Fashion Nova blocked negative reviews of its products from being posted to its website from as early as late 2015 through mid-November 2019.
This is the second time Fashion Nova has had to go head-to-head with the FTC. In April 2020, the FTC announced that Fashion Nova would have to pay $9.3 million to settle allegations that the company failed to properly notify consumers and give them the chance to cancel their orders when the company failed to ship merchandise in a timely manner.
The new lawsuit claims Fashion Nova installed a third-party online review management interface that allowed users to choose to have certain reviews automatically post based upon the star ratings while holding lower starred reviews for client approval prior to posting.
From 2015 to 2019, the online retailer chose to have four and five-star reviews automatically posted to the website, but did not approve or publish “hundreds of thousands lower-starred, more negative reviews.”
According to the lawsuit, the FTC says Fashion Nova led its purchasers to believe that the product reviews on the website accurately reflected the views of all purchasers who submitted reviews to its website.
Fashion Nova has also provided a company statement on the FTC’s allegations:
“The Federal Trade Commission’s allegations against Fashion Nova are 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 issue, in this case, was caused by Fashion Nova’s reliance on a reputable third-party enterprise software vendor, which offered an option to “auto-publish” various star ratings in a drop-down menu. Those that were not auto-published were filtered and could be individually reviewed and manually released. At one point in time, the company inadvertently failed to complete this process 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 That issue was remedied several years ago and all previously unpublished reviews have now been posted to the extent they are actually about the product they were submitted for and do not contain profanity, do not contain threatening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.
Fashion Nova continues to be an entrepreneurial-led company solely focused on providing a great assortment of fashionable clothes at very affordable prices. It prides itself on knowing that 80% of its business comes from repeat customers and does its best to listen carefully to customer feedback every day and keep getting better in everything that it does.”
The FTC also announced that it will be 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.
The proposed settlement is forcing Fashion Nova to pay $4.2 million for harm consumers incurred.
Fashion Nova will also be prohibited from making misrepresentations about any customer reviews or other endorsements. It must also 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.