Fashion Nova is under fire in a class action lawsuit on the heels of the Federal Trade Commission’s (FTC) findings that it intentionally suppressed “hundreds of thousands” of online reviews to artificially inflate the value of its low-priced products.
The class action lawsuit targeted the retailer for “deliberately and knowingly engaging in misleading, deceptive and false statements regarding the products in the course of defendant’s business.”
Fashion Nova declined Sourcing Journal’s request for comment.
The FTC said in its review that from late 2015 through mid-November 2019, Fashion Nova chose to have four- and five-star reviews automatically post to the website, “but did not approve or publish hundreds of thousands lower-starred, more negative reviews.” These reviews generated one, two or three stars out of the five-star system.
The federal agency, which is tasked with protecting consumers and businesses from deceptive or anti-competitive practices, revealed in January that the e-commerce fashion giant would have to pay up $4.2 million for misrepresenting shopper sentiments about its apparel and accessories. Fashion Nova agreed to the settlement.
Specifically, the FTC complaint alleged that Fashion Nova worked with an unnamed third-party online product review management platform to suppress shopper product ratings lower than four stars out of five.
Fashion Nova initially told Sourcing Journal in January that it ‘inadvertently’ failed to review and manually release the reviews.
“At one point in time, the company inadvertently failed to complete this process given certain resource constraints during a period of rapid growth,” the spokesperson said. “That issue was remedied several years ago and all previously unpublished reviews have now been posted.”
In the wake of the FTC fine, customers are now pointing their fingers at Fashion Nova. More than 100 class members are plaintiffs in the class action lawsuit, with aggregate claims exceeding $5 million, exclusive of interest and costs.
By intentionally suppressing the lower-starred reviews, the lowest average star rating for any product on the Fashion Nova website would be 4.0, thus making each product sold look more attractive to prospective purchasers, the lawsuit said. This means the fast-fashion retailer inflated the value of each product, and therefore each product’s price.
Secondly, the suit alleges that Fashion Nova’s conduct omitted any consumer warnings or concerns with the products, which is information that other shoppers should have been given access to prior and likely could have used to determine whether to move ahead with a purchase.
In particular, the suit highlighted five posts from Feb. 15, 2020 to March 11, 2022—four with one star and one with two stars—all of which addressed the lack of size and fit information as well as details on Fashion Nova product quality. The suit said shoppers couldn’t see these kinds of reviews from 2015 to 2019.
“Consumers during that time period had no way of knowing that [the] defendant was suppressing lower-starred reviews, and were instead left to think that the products were simply highly rated and of high-quality,” the lawsuit said. “[The] defendant’s representations of the products during the above time period were materially misleading in that they were likely to deceive a reasonable consumer of other purchasers’ true feelings and experiences with the products, which were more negative than was otherwise advertised.”
As a direct result of the misrepresentations, the plaintiffs and other consumers suffered “actual injuries” because they either would not have bought the product or paid significantly less for them, the suit alleged.
The case was filed in a New Jersey federal court on Monday by plaintiff Kerry Hines. Fashion Nova is accused of violating the New Jersey Consumer Fraud Act, which is designed to protect consumers from “any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission, in connection with the sale or advertisement of any merchandise.”
Hines bought multiple shirts, dresses, jeans, and skirts from Fashion Nova in February, September, October and November of 2018, using the consumer reviews as a reference prior to purchasing. But Hines contends that she would not have purchased the products, or would have paid substantially less for them, if the lower-starred reviews were displayed on the product pages.
As the lead plaintiff, Hines sought to represent consumers who purchased an item from Fashion Nova’s website in New Jersey from March 23, 2016 through Dec. 25, 2018.
Online reviews are a major part of the e-commerce commerce shopping experience, with the suit citing a Podium survey that 93 percent of U.S. adults read reviews before making online purchases. The suit also highlighted a Better Business Bureau survey indicating that roughly 90 percent of consumers say that positive online reviews influence their buying decisions.
The same Podium study also indicated that consumers generally wouldn’t consider buying a product online unless it has a minimum average star rating of 3.4 stars, theoretically incentivizing Fashion Nova to keep reviews about the 4.0 threshhold.
Reviews have been a point of controversy within online shopping given instances of fake reviews or incentivized reviews. A Wall Street Journal report said Amazon failed to prevent sellers from manipulating reviews and circumventing the reporting process
Fashion Nova has a colorful history with the FTC. In April 2020, the women’s retailer faced allegations that it withheld information from shoppers about the status of late orders, failing to give them a chance to cancel when merchandise didn’t ship in a timely manner. The company also illegally used gift cards to compensate shoppers for unshipped goods instead of providing them with cash refunds. Ultimately, Fashion Nova shelled out $9.3 million to settle the case.
The e-commerce fashion giant is currently also embroiled in a legal tussle with Adidas over allegations that it infringed on the athleticwear brand’s Stan Smith sneaker.