In October 2021, the Federal Trade Commission warned more than 700 businesses that they could incur significant civil penalties (up to $46,517 for each violation) if they use reviews or other endorsements in an unlawful manner.
As proof of its intent to actively enforce truthful review and endorsement practices, on January 25, 2022 the FTC announced a $4.2 million settlement with Fashion Nova LLC to settle an enforcement action concerning allegations that the company routinely suppressed negative product reviews from being posted on its website.
According to the FTC complaint, Fashion Nova used a third-party online product review management interface to automatically post four- and five-star reviews to its website, while lower-starred reviews were withheld for the company’s approval. The FTC also alleges that from late 2015 until November 2019, Fashion Nova never approved or posted any of the hundreds of thousands of negative product reviews submitted by consumers. In addition to the monetary penalty, Fashion Nova is also prohibited from any further attempt to suppress negative customer reviews.
The FTC also announced that it is sending letters to 10 more companies offering review management services to place them on notice that avoiding the collection or publication of negative reviews violates the FTC Act.
The FTC has released new guidance for online retailers and review platforms regarding the agency’s key principles for collecting and publishing customer reviews in ways that do not mislead customers. “Deceptive review practices cheat consumers, undercut honest business, and pollute online commerce,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection.
The message is clear: The collection and promotion of online reviews and endorsements must be transparent and reliable. Companies that rely on customer reviews to promote their products or services should review their practices to ensure compliance with current FTC guidelines.
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