FTC fines online shop $4M for hiding reviews below 4 stars

We all know online reviews must be taken with a grain of salt, but generally you’d like to think that a product with a 4.5-star average is better than one with a 3.5-star average. You might be wrong, since the site you’re looking at might not even permit bad reviews to appear — like Fashion Nova, which just incurred a $4.2 million settlement order from the FTC.

What happened was this: Fashion Nova used a third-party review management tool, which is surely a common thing for anyone running a site that lets users review the items they buy. But then they did a bad thing: from 2015 to 2019, they had 4- and 5-star reviews appear automatically on the site, while anything lower than that would require approval. And they didn’t approve hundreds of thousands of them, artificially inflating the perceived quality of the goods on the site.

“Fashion Nova misrepresented that the reviews on its website accurately reflected the views of all purchasers who submitted reviews to the website. The proposed settlement puts provisions in place to address Fashion Nova’s deceptive practice and orders Fashion Nova to pay $4.2 million for harm consumers incurred,” wrote the FTC in a blog post explaining the situation.

You can see the various documents related to the case here.

It seems the agency caught the scent of other scams like this being perpetrated under the auspices of third party review platforms, since it has since sent letters of warning to 10 other (like the original, unnamed) companies that operate them. And it made a broader “watch yourself” announcement back in October regarding fake reviews and deceptive endorsements.

In case you’re worried Fashion Nova is just an innocent victim here, it is worth noting that this isn’t the company’s first brush with the feds, as back in 2020 it agree to pay $9M over shady cancellation and return policies. Caveat emptor! (Sadly, it’s anyone’s guess whether these fines will be paid in full.)

Separately, but probably timed to harmonize with this announcement, the FTC updated its guidelines for marketers looking to pay for or solicit online reviews. There are ways to to do it right, like being transparent and allowing both positive and negative reviews to appear once they have been solicited. And there are… other ways. And it issued new guidance for platforms publishing reviews that they should think twice about manipulating the source, incentives, or visibility of reviews to their own advantage.

Fake reviews are a plague on the online economy, but so far either no one has solved the problem or the cure is — for retailers — worse than the disease, like it requires lots of work or the collapse of various lucrative arrangements. Perhaps this little flex by the FTC will help nudge them in the right direction.

This article was originally published on TechCrunch.com. Read More on their website.