February 7, 2023

Volume XIII, Number 38


February 06, 2023

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Fashion Nova Settles with FTC for $4.2 Million Over Charges it Omitted Negative Reviews

You might think that paying more than $9 million to settle charges of violating the Federal Trade Commission’s (FTC) Mail Order Rule would have spurred clothing retailer Fashion Nova, LLC to review its consumer protection compliance posture. But for the second time in two years, Fashion Nova has found itself in trouble with the FTC, this time for allegedly suppressing negative product reviews on its website. This was the FTC’s first challenge of its kind.

The FTC’s complaint against Fashion Nova alleges the company used a third-party product review management interface for customers to post reviews, and for approximately four years, Fashion Nova chose to allow more positive reviews to be automatically posted to the website while suppressing more negative reviews. The absence of negative reviews gave the false impression that the company’s products garnered uniform praise.

In addition to paying $4.2 million, the proposed settlement, released on January 25, 2022, requires Fashion Nova to post all product reviews, including critical ones, on its website (except for those containing unlawful or offensive content). The company is also barred from misrepresenting customer reviews or endorsements.

This is the first time the FTC challenged a company’s suppression of negative reviews, but it may not be the last. The FTC also sent letters to ten businesses that offer review management services warning them that sidestepping or discouraging negative reviews is potentially deceptive conduct in violation of Section 5 of the FTC Act. The letters instruct the companies to review their policies and practices to ensure they are not helping clients violate the law.

Guidance to businesses, in addition to enforcement efforts, is part of the FTC’s approach. To assist businesses, the FTC published guidance documents for marketers and platforms that outline principles for publishing online reviews. Such principles include not soliciting reviews likely to be favorably biased and treating positive and negative reviews equally. Online retailers and platforms that use reviews as a marketing tool should take note.

© 2023 Keller and Heckman LLPNational Law Review, Volume XII, Number 49

About this Author

Tracy Marshall, Keller Heckman, regulatory attorney, for-profit company lawyer

Tracy Marshall assists clients with a range of business and regulatory matters.

In the business and transactional area, Ms. Marshall advises for-profit and non-profit clients on corporate organization, operations, and governance matters, and assists clients with structuring and negotiating a variety of transactions, including purchase and sale, marketing, outsourcing, and e-commerce agreements.

In the privacy, data security, and advertising areas, she helps clients comply with privacy, data security, and consumer protection laws, including laws governing telemarketing and...

Sheila Millar, Keller Heckman, advertising lawyer, privacy attorney

Sheila A. Millar counsels corporate and association clients on advertising, privacy, product safety, and other public policy and regulatory compliance issues.

Ms. Millar advises clients on an array of advertising and marketing issues.  She represents clients in legislative, rulemaking and self-regulatory actions, advises on claims, and assists in developing and evaluating substantiation for claims. She also has extensive experience in privacy, data security and cybersecurity matters.  She helps clients develop website and app privacy policies,...