When it comes to customer reviews, “fake it ’til you make it” might garner unwanted attention from the federal government.
Fashion Nova agreed to pay the FTC a $4.2 million settlement in 2022, after the agency accused it of refusing to post negative reviews; now, $2.4 million worth of that settlement has been disbursed to more than 148,000 eligible consumers.
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A spokesperson for the FTC told Sourcing Journal that the remainder of the settlement money Fashion Nova paid to the agency was used to vet the claims consumers submitted.
“Most FTC matters, including Fashion Nova, require that the cost of administering redress be deducted from the fund. The cost for a claims process depends on the number of claims submitted and the steps needed to identify duplicate or fraudulent claims. In this case, we received nearly 800,000 claim submissions of which 600,000 claims were determined to be fraudulent or duplicate,” the spokesperson said via email.
The FTC’s complaint against Fashion Nova marked the first time it sought legal action over a company’s purported failure to post negative reviews on its platform. In 2024, several years after it first brought the claim against Fashion Nova, the FTC published a final rule that prohibited a slew of different kinds of fake reviews; that rule also stipulated that companies could not suppress negative reviews from customers.
Companies like Amazon have been working to combat fake reviews with emerging technology for years, but Fashion Nova has not indicated how it works to do the same. The initial complaint the FTC made against it alleged that the company had suppressed hundreds of thousands of reviews that gave a product unfavorable ratings with the help of a third-party vendor. That, the FTC alleged, tricked consumers into believing that artificially inflated reviews were representative of the products being rated.
The terms of the settlement also disallows Fashion Nova “from making misrepresentations about any customer reviews or other endorsements,” which means it has been—and will continue to be—required to post all the reviews it receives, except the ones that are somehow inappropriate or illegal.
Fashion Nova did not immediately respond to Sourcing Journal’s request for comment, but has previously stated that it denies wrongdoing and that it was “highly confident” it would have won had it chosen not to settle the case.
This case wasn’t the California-based company’s first brush with the agency; in 2020, the FTC brought a different case against Fashion Nova, alleging that it concealed information about the late status of orders, which ensured consumers couldn’t cancel orders that wouldn’t make it to their doorsteps on time and that it broke the law by giving consumers gift cards rather than issuing refunds for unshipped orders. In that case, Fashion Nova agreed to a $9.3 million settlement.