FTC Hits Online Fashion Retailer with $4.2M Fine for Blocking Negative Reviews

Last week, Fashion Nova, a California fast-fashion retailer, signed a settlement with the Federal Trade Commission that requires it to pay $4.2 million. The FTC’s Complaint alleges that Fashion Nova blocked negative product reviews from being posted on its website. The agency says this is its first case to challenge the practice of suppressing negative customer reviews.

Specifically, the FTC said in the Complaint that between 2015 and 2019, Fashion Nova used a third-party tool that allowed it to automatically post four- and five-star customer reviews but withheld “hundreds of thousands of lower starred, more negative reviews.” The FTC contends that such withholding is misleading to customers. In a press release, the FTC stated, “suppressing a product’s negative reviews deprives consumers of potentially useful information and artificially inflates the product’s average star rating.”

In addition to the $4.2 million settlement, Fashion Nova is barred from misrepresenting customer reviews or any other endorsements. The FTC also announced that it would send letters to 10 other companies using a similar review practice. Those letters will place them on notice that avoiding publishing negative reviews violates the law. The Commission also released guidance for web-based businesses and review platforms on appropriately managing reviews. That guidance can be found at ftc.gov under the business guideline section.

All companies (not only retailers) should consider the implications of using reviews as advertisements. Not only is it important to consider what is included in advertising, but companies must also consider what is omitted. While the guidance on the FTC’s site is helpful, companies should consult with legal counsel if they have any questions as to whether their advertising practices comply with state and federal laws.