Dear Online Retailers: The FTC is Monitoring How You Handle Customer Reviews | Dorsey & Whitney LLP
This week, the FTC finalized an order settling a complaint alleging that an online fashion retailer blocked negative reviews of its products on its e-commerce site. The penalty: a $4.2 million fine, 10 years of record-keeping obligations and 20 years of compliance monitoring. The Charge: The retailer automatically posted four- and five-star reviews and put lower-star reviews on hold.
The director of the FTC’s Consumer Protection Bureau noted that “Fashion Nova is held accountable for these practices, and other businesses should take notice.” So what should other online retailers do to avoid misleading consumers? First, implement a fair customer review posting policy that accurately reflects the opinions of all customers who submit reviews. The ordinance gives some guidance for when it might be appropriate to withhold a notice (and when it wouldn’t), but overall relevant notices should be published so the consumer can get a picture complete. The FTC has also released some advice for brands operating in this space: Solicit and Pay for Online Reviews: A Guide for Marketers. And if your brand employs another company to help with its online reviews, make sure they follow the FTC’s advice Featuring Online Customer Reviews: A Guide for Platforms. Ultimately, your business may be held liable for actions taken by contractors you employ to help manage review posting for your brand.