In its first case challenging a company’s failure to post negative reviews on its website as a deceptive practice, the Federal Trade Commission (FTC) announced a proposed settlement with fast-fashion retailer Fashion Nova, LLC in late January 2022.
Online reviews have become a key part of e-commerce. According to Dimensional Research, nine out of 10 customers are influenced by online reviews. They add credibility to e-commerce websites and can boost rankings on search engines like Google. However, online reviews have been rife with prolific fraud and deception, with some parties going so far as to fabricate or purchase fake reviews to bolster a product’s image. The problem is severe enough that on a near-annual basis, e-commerce giant Amazon announces yet another crackdown. Fake reviews, of course, are clearly illegal under Section 5 of the FTC Act, 15 U.S.C. Section 45, which prohibits unfair and deceptive acts and practices, including false testimonials.
The Fashion Nova case is interesting because it did not involve flagrant fake reviews. Rather, Fashion Nova engaged in an alleged sleight of hand resulting in negative reviews not appearing on its website or reflected in overall star ratings for certain products. According to the FTC’s complaint, Fashion Nova installed a third-party review management interface that allowed it to automatically post certain reviews while withholding other reviews for its “approval” prior to posting. The FTC alleged that, from 2015-2019, four- and five-star reviews were automatically published, while hundreds of reviews with less than four stars were suppressed.
The proposed settlement orders Fashion Nova to pay $4.2 million for harm incurred by consumers, and Fashion Nova has agreed to post product reviews regardless of whether they are positive or negative. Although the proposed settlement recognizes that some reviews may not be posted for legitimate reasons (such as obscenity, explicit content, racist content or otherwise unlawful content), those criteria must be applied to all reviews equally.
The FTC has also announced it is sending warning letters to companies that offer review management services, warning them not to take steps that could violate the FTC Act and truth in advertising laws.
In light of the Fashion Nova action, brands should:
- Review their online and e-commerce review processes to make sure negative reviews are not being unlawfully suppressed.
- Treat reviews equally regardless of whether the opinion is positive or negative.
- Ensure any moderation policy is implemented uniformly and not used primarily to suppress or delay the publication of negative reviews.
- Solicit reviews in a neutral manner, in a genuine attempt to collect honest opinions.
- Perform adequate diligence on service providers that offer promises of increasing customer reviews and ratings. How is it, exactly, that they satisfy their promises?
This document is intended to provide you with general information regarding the FTC focusing on disappearing product reviews as a deceptive practice. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.