UPDATE: This story has been updated with Fashion Nova's response to the settlement
Fashion Nova is required to pay a $4.2 million settlement after being accused of hiding negative reviews posted online.
In a press release, the Federal Trade Commission (FTC) stated that the California-based retailer, known for its "fast fashion" products, will also be prohibited from concealing reviews from consumers going forward.
The FTC alleged in a complaint that Fashion Nova misrepresented the reviews on its website by suppressing customer reviews with ratings lower than four stars out of five. The case marks the FTC's first involving these specific allegations.
According to the FTC, Fashion Nova used a third-party online product review management interface to post reviews with four or five stars to its website, while holding lower-starred reviews for the company's approval.
It's alleged that between late 2015 and November 2019, Fashion Nova never approved or posted hundreds of thousands of lower-starred, mainly negative, 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. "Fashion Nova is being held accountable for these practices, and other firms should take note."
The FTC also announced that it is issuing notices to 10 companies that provide review management services, informing them that the failure to collect or publish negative reviews infringes on the FTC Act. Online retailers will also receive updated guidelines from the FTC to ensure consumers are not misinformed.
In a statement shared with PEOPLE, Fashion Nova said "The Federal Trade Commission's allegations against Fashion Nova are inaccurate and deceptive."
"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," it continued. "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."
It shared that the accusations stem from "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." The company "inadvertently failed to complete this process given certain resource constraints during a period of rapid growth," the statement continued, sharing that the issue was fixed "several years ago" and the "unpublished" reviews are now posted "to the extent they are actually about the product they were submitted for ... "
"Fashion Nova continues to be an entrepreneurial led company solely focused on providing a great assortment of fashionable clothes at very affordable prices," per the statement. "It prides itself on knowing that 80% of its business comes from repeat customers and does its best to listen carefully to customer feedback every day and keep getting better in everything that it does."
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This is the second case the FTC has filed against the popular retailer in recent years.
In April 2020, Fashion Nova agreed to pay $9.3 million to settle allegations that the company failed to notify consumers and give them sufficient opportunity to cancel orders that weren't shipped in a timely manner.
The FTC also alleged the company illegally sent out gift cards for unshipped merchandise instead of providing refunds.