For online retailers, it is important to take the bad with the good when it comes to online reviews...
For online retailers, it is important to take the bad with the good when it comes to online reviews. If not, you could face enforcement by the Federal Trade Commission (FTC).
The FTC recently announced that online fashion retailer Fashion Nova, LLC will pay $4.2 million to settle allegations that the company blocked negative reviews of its products from being posted to its website. “Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in a press statement. “Fashion Nova is being held accountable for these practices, and other firms should take note.”
What Did the FTC Allege?
According to the FTC’s complaint, Fashion Nova is a “fast fashion” apparel company based in California. Each product page on the Fashion Nova website provides consumers with the opportunity to review the product and rate it on a five-star scale. At the bottom of each product page is a button labeled “Write a Review.” Consumers who click on the button are encouraged to give the product a star rating from one to five, write a review, and “Post” it. If there are no customer reviews for a particular product, consumers are encouraged to “Be the First to Write a Review.” Fashion Nova also sent its customers emails soliciting product reviews of the customers’ recent purchases. Each product page with existing reviews displayed the product’s average star rating and a summary graph of the number of reviews with each star rating, followed by individual consumers’ reviews and ratings.
According to the FTC, Fashion Nova installed a third-party online product review management interface, which allows users to choose to have certain reviews automatically post based upon their star ratings and hold lower-starred reviews for client approval prior to posting. 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’s complaint alleged that the product reviews on the Fashion Nova website did not accurately reflect the views of all purchasers who submitted reviews of the products because in numerous instances the company suppressed product reviews with ratings lower than four stars. These practices constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, according to the FTC. Section 5(a) authorizes the FTC to investigate and challenge “unfair methods of competition in or affecting commerce.”
What Are the Consequences for the Online Retailer?
Under the proposed settlement, Fashion Nova will pay $4.2 million. The retailer will also be prohibited from making misrepresentations about any customer reviews or other endorsements. In addition, it must 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.
Is Additional Enforcement on the Horizon?
The FTC also announced that it is 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. As discussed in prior articles, the FTC also has enforcement authority over online reviews under the Consumer Review Fairness Act (CRFA). The statute prohibits companies from employing a contract provision that bars or restricts review of a company’s products, services, or conduct; imposes a penalty or fee against someone who provides a review; or mandates surrender of intellectual property rights in the content of reviews.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Michael Sheppeard, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
