FTC Sends Refunds in Case Alleging Concealment of Negative Reviews

The Federal Trade Commission (FTC) is sending nearly $2.4 million to customers of fast-fashion retailer Fashion Nova, which the agency alleged prevented negative reviews from being posted on the company’s website.

The FTC announced its complaint against Fashion Nova in January 2022 and finalized an order settling the allegations in March 2022, the FTC said in a Tuesday (Jan. 28) press release.

The case was the agency’s first involving a company’s efforts to conceal negative customer reviews, according to the release.

Fashion Nova did not immediately reply to PYMNTS’ request for comment.

The FTC is sending payments to 148,351 Fashion Nova customers who filed a valid claim, according to the release. Each consumer was given the choice of receiving a check or a PayPal payment when completing their claim form.

Along with paying money to compensate affected consumers, Fashion Nova was required to stop suppressing customer reviews of its products, per the release.

The FTC alleged that Fashion Nova misrepresented the reviews on its website by saying they reflected “the views of all purchasers who submitted reviews” when, in reality, the company didn’t publish reviews with fewer than four stars out of five, PYMNTS reported at the time the settlement was finalized.

When the FTC announced its complaint against the company in January 2022, Samuel Levine, who was director of the FTC’s Bureau of Consumer Protection at the time, said in a press release: “Deceptive review practices cheat consumers, undercut honest businesses and pollute online commerce.”

On Jan. 3, the FTC approved a final order against Sitejabber, the provider of an artificial intelligence-enabled consumer review platform, prohibiting the company from making or facilitating misrepresentations about ratings and reviews.

The agency alleged that Sitejabber collected consumer ratings and reviews for its online business clients at the time of purchase, before the consumers experienced the product or service; used these ratings and reviews to inflate its clients’ average ratings and review counts; and provided its clients with the means to misrepresent that ratings and reviews were from customers who had used their products.

In December, the FTC approved a final order settling its complaint against Rytr for selling an artificial intelligence “Testimonial & Review” service that the agency alleged violated the FTC Act by providing subscribers with a means to generate false and deceptive content for reviews.