Fashion Nova to Pay $4.2 Million in FTC Settlement

The Garnette Report

LOS ANGELES — Fashion Nova will pay $4.2 million to the Federal Trade Commission. The news came in an announcement on Tuesday that describes it as a first of its kind. Fashion Nova faced allegations that it blocked negative customer reviews from its website.

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Fashion Nova

In a complaint, the FTC alleged that the Los-Angeles based retailer misrepresented the customer reviews and suppressed those with ratings lower than four out of five stars. This case is the FTC’s first involving a company’s efforts to conceal poor reviews. The complaint alleges that Fashion Nova installed a third-party online product review management system. Additionally, that from late 2015 through mid-November of 2019, the company chose to only post four and five star reviews.

This isn’t the first case the FTC has brought against Fashion Nova. In April 2020, the FTC announced that the company had agreed to pay $9.3 million for failing to “properly notify consumers and give them the chance to cancel their orders when it failed to ship [products] in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds.”

Samuel Levine, director of the FTC’s Bureau of Consumer Protection, responded by saying, “Deceptive review practices cheat consumers, undercut honest businesses and pollute online commerce. [We’re holding] Fashion Nova accountable for these practices, and other firms should take note.”

In an email to CBS MoneyWatch, a spokesperson for the company stated that “All previously unpublished reviews have now been posted to the extent they are actually about the product [that] they were submitted for and do not contain profanity, do not contain threatening language and comply with other reasonable terms.”

Terry Fahn, a spokesman for the company, said in an emailed statement described the rumors as inaccurate. Fahn also stated that Fashion Nova was “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 [by legal action].”

The FTC has also said that it will be sending letters to 10 companies offering review management services. The letters place the companies on notice that avoiding the publication of negative reviews violates the FTC Act. The FTC warned 700+ businesses that they could incur penalties if they use reviews in ways that violate the act.

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