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The US government is starting to crack down on companies that hide negative reviews

Business Insider logo Business Insider 1/26/2022 (Sarah Jackson)
Oscar Wong/Getty Images © Provided by Business Insider Oscar Wong/Getty Images
  • The government made its first case involving companies that hide bad reviews from consumers.
  • The Federal Trade Commission went after retailer Fashion Nova, alleging it blocked all but the highest reviews from its website for years.
  • The company will pay $4.2 million and must now post all reviews of current products.

The US government is starting to crack down on companies that hide negative reviews from consumers.

The Federal Trade Commission filed a complaint against Fashion Nova in its first case regarding a company's involvement in concealing customer reviews, and the retailer has agreed to cough up $4.2 million to settle the allegations, according to a press release issued Tuesday.

The agency says Fashion Nova blocked reviews lower than four out of five stars from appearing on its website and thus "misrepresented that the product reviews on its website reflected the views of all purchasers who submitted reviews."

"Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce," said Samuel Levine, director of the FTC's Bureau of Consumer Protection, in the release. "Fashion Nova is being held accountable for these practices, and other firms should take note."

The FTC alleged in a complaint that the fast-fashion company used a third-party online product review management interface to automatically post four- and five-star reviews to its website. The system withheld lower reviews for Fashion Nova's approval, but the retailer never ended up approving or posting hundreds of thousands of lower reviews from late 2015 to November 2019, the FTC alleges.

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Fashion Nova says these allegations are "inaccurate and deceptive." Under terms of the settlement, the company "neither admits or denies" the complaint's allegations.

"Fashion Nova never suppressed any website reviews, and it immediately and voluntarily addressed the website review issues when it became aware of them in 2019," the company said in a statement to Insider. "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 that it would incur in litigation."

The company continued: "The issue in this case was caused by Fashion Nova's reliance on a reputable third-party enterprise software vendor, which offered an option to "autopublish" various star ratings in a drop-down menu. Those that were not autopublished were filtered and could be individually reviewed and manually released. At one point in time, the company inadvertently failed to complete this process given certain resource constraints during a period of rapid growth. That issue was remedied several years ago and all previously unpublished reviews have now been posted to the extent they are actually about the product they were submitted for and do not contain profanity, do not contain threatening language and comply with other reasonable terms."

Besides paying the $4.2 million sum, Fashion Nova will also be "prohibited from making misrepresentations about any customer reviews or other endorsements" under the proposed settlement. The company must also post on its website all customer reviews of currently sold products. An exception stands for "reviews that contain obscene, sexually explicit, racist, or unlawful content and reviews that are unrelated to the product or customer services like shipping or returns."

The FTC also brought a case against Fashion Nova in 2020. In that case, the FTC alleged the retailer "failed to properly notify consumers and give them the chance to cancel their orders when it failed to ship merchandise in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds." Fashion Nova paid $9.3 million to settle those allegations.

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