There’s No Hiding from this FTC

Today the Federal Trade Commission (FTC) leveled a fine on a company for suppressing negative reviews of its products. The company,  Los Angeles-based, Fashion Nova will probably appeal the ruling, but as it stands will be paying out $4.2 million.

According to the complaint, Fashion Nova suppressed reviews that were lower than four out of five stars.   pro is fining online retailer Fashion Nova $4.2 million for suppressing negative reviews of its products on its website, the agency announced on Wednesday.

Driving the News

The FTC alleged in a complaint that Fashion Nova suppressed reviews that were lower than four out of five stars. Here is verbatim what the FTC found.

Fashion Nova installed a third-party online product review management interface. The interface 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 of lower-starred, more negative reviews. 

In connection with the advertising, promotion, offering for sale, or sale of Fashion Nova brand apparel, Respondent has, through the means described in Paragraphs 6 and 7, represented, directly or indirectly, expressly or by implication, that the product reviews on the Fashion Nova website accurately reflect the views of all purchasers who submitted reviews of Fashion Nova products to the website. 

In fact, 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 Respondent suppressed product reviews with ratings lower than four stars. Therefore, the representation set forth in Paragraph 10 is false or misleading. 

Angry Influencers?

In a statement to Axios, Fashion Nova denied the allegations. It called them “inaccurate and deceptive.” The company, founded by Richard Saghian, has apparently done quite well relying on social media to drive its growth. According to some sources the company has revenues of about $400 million and Saghian is worth some $50 million. The company has used celebrities to boost its following. Now it will have to address any negative fallout with its stable of high-profile influencers. 

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection had this to say. “Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce.”

The FTC also indicated that they were sending letters to 10 review management sites. The letters notify them that not collecting or publishing negative reviews violates the FTC Act. The FTC did not indicate which 10 companies they had selected to send the letter to. 

So is this the tip of the iceberg? Anyone who’s followed the ratings and reviews space knows that there’s a ton of this happening today. And it has been going on since Yelp launched online reviews. To its credit, Yelp has been hollering loud and clear about its position on review solicitation. And on the consequences of rampant fake rating and review activity. 

Fashion Nova isn’t a household brand like Nike, but it clearly has a following. Will this action close them down? Hardly. But here’s the funny thing. The fine will pale when compared to the ill will the company will encounter while trying to rebuild its image. 

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