02/08/2022

Fast Fashion Retailer Settles FTC Allegations of Customer Review Manipulation for $4.2 Million

Many shoppers will not purchase any product or service without first reading the reviews of prior customers. Therefore, retailers may be tempted to more prominently display the positive reviews and/or suppress negative reviews. However, a recent FTC settlement highlights the importance of displaying all reviews, including the negative ones, in a neutral manner.

Like most e-commerce websites, “fast fashion” retailer Fashion Nova invites customers to share product reviews and publishes them on each product page of its website. According to an FTC complaint, however, Fashion Nova worked with a third party to manipulate which customer reviews shoppers would see. Specifically, the FTC alleged that Fashion Nova used an “online product review management interface” to automatically post all four- and five-star reviews, but required review and approval of all reviews with three stars or fewer.

The FTC alleged Fashion Nova misled consumers, expressly or impliedly, by representing that the published reviews accurately reflected all customer reviews, when in fact negative ones were being suppressed. The FTC and Fashion Nova settled the case for $4.2 million.

The settlement requires Fashion Nova to display all reviews received, including the negative ones, on each page that displays product reviews. However, it does not need to display reviews that are:

  • Unrelated to the respective product or Fashion Nova’s service, delivery, exchanges, or returns; or
  • Unlawful, profane, obscene, vulgar, sexually explicit, or inappropriate with respect to race, gender, sexuality, or ethnicity, as long as the criteria is applied uniformly to all reviews.

An FTC press release states that the case is “the FTC’s first involving a company’s efforts to conceal negative customer reviews.”

Relatedly, the FTC recently promulgated two new guidance documents, each addressing customer reviews:

  • A guide for marketers, which addresses soliciting reviews and working with third-party review platforms, found here, and
  • A guide for online review platforms, found here.  

The Fashion Nova settlement and FTC guidance, as well as prior case law, provides e-commerce retailers with some “do’s and don’ts” for customer reviews, including the following:

  • DO treat positive and negative customer reviews the same.
  • DO remain neutral when soliciting customer reviews.
  • DO clearly and prominently disclose any incentives that were provided in exchange for reviews.
  • DON’T double-count reviews, i.e., across platforms.
  • DON’T manipulate or substantively alter reviews.
  • DO have procedures in place to spot fake and manipulated reviews, including from any third-party vendors that advertise their ability to boost customer reviews and ratings.

The FTC’s complaint against Fashion Nova and its published guidance suggests that this will be an enforcement priority in the coming months and years. Accordingly, e-commerce retailers should have procedures in place to ensure that their customer review practices align with evolving guidance from the FTC and other regulators.

If you have any questions or need advice regarding your customer review practices, please contact Kasey Boucher or Matt Stein.