The Federal Trade Commission (FTC) is issuing over 148,000 refunds totaling nearly $2.4 million in a settlement order involving online fast fashion retailer Fashion Nova, which is accused of hiding negative reviews.
To qualify for the refund, consumers who purchased items from Fashion Nova before Nov. 21, 2019, had to make a "valid claim" with the FTC before the August 15, 2023, deadline. Currently, the FTC is no longer accepting claims in the matter.
In the final order, Fashion Nova is explicitly prohibited from hiding reviews or endorsements, and is obligated to present them to customers "regardless of the endorser's opinion or rating." Additionally, the retailer was ordered to pay $4.2 million.
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While recipients of the FTC payments in this case were spread out across the country, according to the commission’s data, Illinois had the largest number of recipients with more than 25,000. Among the 148,351 recipients, the median refund was $16, according to the FTC.
The FTC made its allegations against Fashion Nova in January 2022, kicking off the first-of-its-kind case.
"From as early as late 2015 through mid-November 2019, Fashion Nova chose to have four- and five-star reviews automatically post to the website, but did not approve or publish hundreds of thousands lower-starred, more negative reviews," the FTC wrote in its complaint against Fashion Nova.
The FTC claimed to have found "numerous instances" in which Fashion Nova "suppressed product reviews with ratings lower than four stars," making the representation of their products "false or misleading."
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While this case was the FTC’s first involving negative reviews, it was not the commission’s first case involving Fashion Nova. In April 2020, the fast fashion retailer agreed to pay $9.3 million over allegations "that it didn’t properly notify consumers and give them the chance to cancel their orders when it failed to ship merchandise in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds."
Additionally, in 2022, the FTC put several companies offering review management on notice, informing them that "avoiding the collection or publication of negative reviews violates the FTC Act."
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In its guide to featuring online customer reviews, the FTC instructs companies to not "prevent or discourage" consumers from submitting negative reviews. While a "reasonable process" to ensure reviews are genuine is allowed, the FTC tells businesses to "treat negative and positive reviews equally."
