FTC Settles with Company Over Failure to Post Negative Reviews

By Lisa Dubrow

The FTC just announced its first case involving a company’s failure to post negative reviews, and the settlement is illustrative in providing guidance in what companies can and cannot do.

Fashion Nova’s website contains customer reviews rating its products on a five-star scale. Shoppers visiting the website viewed individual reviews for each product, as well as the average star rating the product received and a graph breaking down the number of reviews received for each product by star rating. But, the FTC alleges, negative reviews were not displayed on the website and not reflected in overall star ratings. Allegedly, from 2015 to 2019, Fashion Nova automatically published four-and five-star reviews while not posting any of the hundreds of thousands of reviews that got below four stars. According to the FTC, suppressing negative reviews “deprives consumers of potentially useful information and artificially inflates the product’s average star rating” in violation of Section 5 of the FTC Act. The company agreed to pay $4.2 million to settle Federal Trade Commission allegations.

Under the proposed settlement, Fashion Nova is prohibited from making misrepresentations about customer reviews. In addition, the company must generally post all customer reviews, with the exception of reviews that are unrelated to the company’s products or customer service (which include shipping and returns) or contain obscene, sexually explicit, racist, or unlawful content, so long as the criteria is applied uniformly to all reviews. This is helpful guidance to have in mind when filtering reviews or working with review platforms to manage reviews.

Review suppression is not the only customer review sleight of hand on the FTC’s radar. The FTC also announced it is also sending letters to ten companies that offer review management services, warning them to not take improper steps to avoid collecting or publishing negative reviews.

The guidance in the FTC press release stated the following:

• “Treat reviews equally. Post all genuine reviews regardless of whether the opinion is positive or negative. In addition, if your company has review moderation policies, ensure the policy is implemented uniformly, regardless of the opinion expressed. Don’t treat negative reviews with more scrutiny.
• Solicit reviews neutrally. Soliciting reviews should be a genuine attempt to collect all honest opinions. Don’t ask for reviews only from those likely to leave positive ones or discourage submission of negative reviews.
• Outsource review management responsibly. Review and reputation management companies may offer promises of increasing your customer reviews and ratings. Make sure you understand what they are doing. You can be held responsible for what they do on your behalf.”

The FTC also issued two new publications with guidance for businesses about reviews, both drawing on principles from Section 5 of the FTC Act.

One is for websites and platforms that collect, moderate, and publish reviews (https://www.ftc.gov/tips-advice/business-center/guidance/featuring-online-customer-reviews-guide-platforms)

The other is for marketers who may solicit or pay for reviews of their own products and services (https://www.ftc.gov/tips-advice/business-center/guidance/soliciting-paying-online-reviews-guide-marketers).

Takeaway:  Follow the guidance above and ensure any third parties assisting you in garnering and/or publishing reviews are doing so as well.

Lisa Dubrow

Lisa Dubrow counsels clients on legal issues surrounding the advertising and marketing of goods and services, including consumer protection issues, the security and privacy of consumer databases, state and federal compliance with all methods of sales, including e-commerce, direct mail and telemarketing, negative option sales, “back end issues” related to consumer payment, privacy of consumer information, behavioral marketing and informational capture, licensing arrangements and affiliate sales arrangements, negotiations with vendors, agencies, telemarketers, fulfillment and talent, and any and all issues pertaining to bringing goods and services to market.  She also regularly counsels clients on how to properly implement competitions, sweepstakes, contests and other promotional events.

Lisa works directly for clients through her own law firm, and also consults for law firms as a freelance lawyer through Montage Legal Group.  For more information on using Lisa for project, please email [email protected]