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Fashion Nova pays $4.2 million to settle federal online review complaint

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Posted at 1:39 PM, Feb 09, 2022

The Federal Trade Commission is taking action against companies it believes are bending the rules of the online review section.

In January, FTC leaders announced a $4.2 million settlement with online fast-fashion retailer Fashion Nova, resolving allegations that Fashion Nova only published four- and five-star reviews from late 2015 until November 2019.

"This is actually the FTC's first case challenging a company for the failure to post negative reviews," said Amber Lee, an attorney in the FTC's Division of Advertising Practices. "We alleged Fashion Nova's review section suggested it contained the reviews of all purchasers who submitted an online review, when in fact, for a period of four years, it withheld hundreds of thousands of negative reviews."

The FTC's complaint said Fashion Nova used a third-party service to post positive reviews to its website automatically.

According to the FTC, anything lower than three stars would be held for company approval, claiming Fashion Nova didn't post any held reviews for four years.

"It's hard to have a complete picture of how often this is happening," said Lee, "but that's one of the reasons we are bringing this case: To show the marketplace that we do take this seriously. We want consumers to be able to shop online, especially now that consumers are shopping online so frequently, and to be able to look at the business's website and see the full picture of what other consumers are saying about the product."

In a statement, Fashion Nova called the FTC's allegations "inaccurate and deceptive."

"[Fashion Nova] immediately and voluntarily addressed the website review issues when it became aware of them in 2019," according to the statement. "Fashion Nova is highly confident that it would have won in court and only agreed to settle the case to avoid the distraction and legal fees."

Under the terms of the settlement, Fashion Nova will be forced to post all customer reviews on its website, "with the exception of reviews that contain obscene, sexually explicit, racist or unlawful content."

According to the FTC, Fashion Nova is also banned from "making misrepresentations about any customer reviews or other endorsements."

A common problem for online consumers

"One thing this case illustrates," said Lee, "is how hard it is for a consumer to know whether they're getting the full picture by looking at a seller's website."

While no data indicates how many businesses delete negative reviews from their website, a recent World Economic Forum study found that about 4% of online reviews may be fake.

The FTC advises consumers "to take their time, and to look and compare reviews from a variety of sources," said Lee. "We suggest starting with sites that are well-known for having credible and impartial expert reviews."

Marketing experts say that can be easier said than done.

"A lot of people are going to be calling my firm and asking how they can get reviews removed or suppressed," said Cynthia Giles, the founder of Cut Throat Marketing, which has offices in Colorado and South Carolina. "They want to know how Fashion Nova did it. And I always recommend - don't do that, people. Just be honest."

Giles said, in her experience, it is "very, very easy" for companies to purchase positive reviews online. It creates a complex landscape for consumers to navigate.

"It's not very common in service industries anymore because Google has cracked down on it," Giles said. But in other large online marketplaces, "with the way their stores are managed and set up, it's very easy to buy reviews. You can literally go to some websites and say, 'I want to buy some reviews,' and you'll get people to bid on it. They will just sit there and keep leaving reviews."

The practice can cost consumers in the long run. In the evolving world of online commerce, the review section plays a vital role in helping consumers decide whether a product is worth the money.

54% of online shoppers read reviews for everything they purchase, according to one 2021 survey. 25% say reviews play the most significant role in their purchasing decision.

"If you absolutely have to buy online, I would go and ask your friends on your social media platforms, 'Have you ever purchased from this company before?'" Giles said. "It's very difficult right now to tell you where to go to find honest reviews regarding these social media-based, e-commerce fashion stores. It's very, very difficult to find honest reviews for them right now."

The larger problem

Aram Sinnreich, the chair of the communication studies department at American University, said review schemes play on people's natural psychology.

"We tend to operate according to what we call a preferential attachment," Sinnreich said. "If something is popular, it must mean that a lot of other people like it, and in turn, that must mean it's pretty good."

That assumption, according to Sinnreich, "has been completely falsified online through the kind of fraud we see with various websites, creating platforms that allow people to juice up their ratings for money."

The money often comes directly from consumer wallets.

According to estimates from the World Economic Forum, the online review industry influences $152 billion in spending each year.

"What we need is basically the equivalent of a declaration of human rights, saying that data should not be messed with and our decision-making processes should not be subverted by automated algorithms," said Sinnreich, describing the need for policy at the state and federal level.

"You can't have a democratic society, a just and equitable society unless you can be confident that data means what it means," Sinnreich said. "That it travels where it's supposed to travel and that you have a basic modicum of privacy in your dealings."

Protecting yourself

In the end, the burden is on us to make sure we aren't influenced by bad actors online.

"Take your time to look at a variety of sources for reviews," said Lee, who pointed out that fraud can be reported directly to the FTC online. "If you can, try to find websites that are well-known for giving credible or impartial expert reviews."

Some believe it can be best to avoid the online marketplace altogether.

"Buy your clothes local," said Giles. "Try to buy from a local store. That's probably the best advice I can give you."