Fashion Nova To Pay $4.2 Million To Settle FTC Allegations It Squashed Negative Online Reviews Of Its Products
LOS ANGELES (CBSLA) — Fashion Nova CEO Richard Saghian will pay a fortune as the winning bidder for "The One," a Bel Air megamansion famous for its decadent amenities and checkered history, but his online fashion empire will also have to pay millions to the Federal Trade Commission in a settlement announced recently.
Los Angeles-based Fashion Nova will pay $4.2 million to settle the FTC allegations that the company blocked negative reviews of its products from being posted to its website. The company will also be prohibited from suppressing customer reviews of its products.
The fast-fashion online retailer misrepresented that product reviews on its website reflected the views of all customers who submitted reviews, according to FTC allegations, when in fact, Fashion Nova used a third-party online product review management interface to suppress reviews with ratings lower than four stars out of five. The FTC alleges Fashion Nova blocked hundreds of thousands of lower-starred, negative reviews between late 2015 and November 2019.
The Fashion Nova complaint is the FTC's first involving a company's efforts to squash negative customer reviews.
"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 statement. The FTC says it is also notifying 10 online review management service companies that avoiding the collection or publication of negative reviews violates the FTC Act, and the agency is releasing new guidelines on collecting and publishing customer reviews for online retailers and review platforms.
The negative reviews case is the second the FTC has brought against Fashion Nova in recent years. In April of 2020, Fashion Nova agreed to pay $9.3 million to settle FTC allegations that the company failed to notify customers and give them a chance to cancel their orders when merchandise was not shipped in a timely manner, and that the company illegally used gift cards to refund customers for unshipped merchandise, rather than giving a refund.