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Fashion Nova Customers Nab $6.5 Million in FTC Settlement

The Federal Trade Commission (FTC) is sending payments totaling more than $6.5 million to more than 500,000 consumers who were affected by online retailer Fashion Nova’s violations of the FTC’s Mail, Internet, or Telephone Order Merchandise Rule.

According to the FTC, Fashion Nova promised consumers fast shipping of their orders but regularly failed to meet those promises, didn’t properly notify consumers of shipping delays and didn’t give them the chance to cancel their orders and receive prompt refunds. The company also illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds. Gift cards are not considered refunds under the requirements of the Mail Order Rule.

The FTC is providing more than $6.5 million in payments to 518,552 consumers, including more than 40,000 consumers who live outside the United States in 169 different countries. Consumers receiving a refund from the FTC will get a payment of $12.60 each.

The vast majority of the payments are being sent via PayPal to the email addresses of affected consumers, while a few consumers will receive payments via paper check. In addition to the payments, the FTC said Thursday the order required Fashion Nova to refund $2.8 million to some consumers directly. The total settlement was $9.3 million.

Consumers who are receiving payments via PayPal have already been contacted via email and will have 30 days to accept the payment. Paper checks will expire in 90 days.

Fashion Nova settled the FTC complaint ruled last April that charged the company made clear promises to consumers for years that they offer fast shipping of their products. This includes using phrases like “Fast Shipping,” “2-Day Shipping” and “Expect Your Items Quick!” Instead, the company regularly failed to meet its shipping promises to consumers and failed to meet the Mail Order Rule’s requirement that consumers be notified of shipping delays and given the chance to cancel orders and receive prompt refunds.

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A company spokesperson Fashion Nova fully cooperated with the FTC’s detailed Mail Order Rule requirements once brought to its attention.

“These issues stemmed from exponential growth in 2017, which taxed our warehouse and IT systems,” the spokesperson said.  “Since then, we have made additional investments in our operating systems, training and help center to further optimize support to our customers. We are proud of who are and where we are going and are pleased to be putting this matter behind us so that we can continue to focus on our customers.”

“The same rules that we have enforced for nearly 50 years against catalogers and other mail-order companies also apply to online sellers,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said at the time. “Online retailers need to know that our Mail Order Rule requires them to notify customers in the event of shipping delays and offer the right to cancel with a full refund, not just a gift card or a store credit.”