On January 25, 2022, the Federal Trade Commission released a proposed rule as part of an enforcement action on advertising and related sales training materials that should be mandatory for any business that operates a website. retail for consumers. This information pertains to how companies publish consumer reviews, and companies might be surprised to learn that the FTC expects them to give equal exposure to positive and negative reviews.
The FTC’s proposed settlement affects Fashion Nova, LLC, a “fast fashion” company that sells clothing online. What caught the FTC’s attention was that each product page on Fashion Nova’s website allowed consumers to provide reviews and rate the product on a five-star scale. Product pages displayed consumer reviews and ratings; however, the FTC alleged that the company improperly screened reviews with a rating below four or five stars, creating a misleading impression of customer satisfaction. Based on the FTC’s complaint, it appears that the site’s average star rating and number of reviews with each rating accurately incorporated all reviews, but the individual reviews posted on the site were only the positive reviews. The FTC alleged that this constituted an unlawfully unfair or deceptive act or practice because Fashion Nova stated or implied that the reviews posted reflected the opinions of all customers when, in fact, it was suppressing negative reviews by not not posting on product pages.
In addition to requiring Fashion Nova to pay more than $4 million in monetary relief, the proposed settlement, which the FTC must approve after a public comment period, prohibits Fashion Nova from making express or implied misrepresentations about the notices. and product recommendations. The policy identifies four categories of misrepresentation specifically prohibited: (1) that product reviews on the website accurately reflect the opinions of all reviewers; (2) That product reviews are unedited; (3) that product reviews are presented independently of opinion or rating; and (4) how product reviews factor into any overall product rating.
Additionally, for Fashion Nova websites that display product reviews, the settlement would require the company to display all reviews submitted by consumers for products currently offered for sale, including all reviews that the company had previously removed from display. The settlement would allow the company to filter out reviews unrelated to its products or customer service and inappropriate content. This provision also clarifies that Fashion Nova is not required to offer consumers the opportunity to review its products.
Companies might be surprised to learn that while the company allows or encourages consumers to submit reviews, the FTC expects the company to even post negative reviews on its website. Companies could see this as the FTC insisting that companies tell consumers why they should spend their money elsewhere. From the FTC’s perspective, however, the terms of the Fashion Nova settlement are simply what is needed to give the public an accurate understanding of a product’s pros and cons, as opposed to a misleading sense of customer satisfaction.
In a new companion article on Posting Online Reviews, the FTC offers additional tips for staying on the safe side of the FTC law. These tips include: (1) Don’t solicit reviews alone customers likely to tell positive stories; (2) Do not encourage customers to submit positive reviews; (3) Disclose any inducements offered as part of a review process; and (4) Not discourage negative reviews.
The FTC also offers suggestions for companies that moderate reviews: (1) have reasonable processes in place to weed out false or misleading reviews; (2) Do not edit reviews to change their message; and (3) Treat positive and negative reviews equally. With respect to publishing reviews, the FTC recommends the following: (1) Publish all genuine reviews without excluding negative reviews; (2) Not display reviews in a misleading manner, such as highlighting positive reviews and burying negative reviews; (3) Disclose any compensation or other connection between the company and the author of the review, so that the public can decide how this might affect their use of the review; (4) Clearly and prominently disclose how reviews are collected, processed, and displayed and how overall ratings are calculated, to avoid misleading consumers; and (5) Have reasonable procedures in place to identify and deal with false or suspicious reviews after they are posted.
The FTC’s postings on posting online reviews correctly also offer guidance for businesses that work with consumer review service providers, such as search engine optimization and reputation management companies. FTC warns companies against working with ‘comparison websites’ that claim to offer unbiased reviews while ‘executing pay-to-play’ transactions behind the scenes, allowing compensation to have an impact on ratings, reviews and placement. The FTC warns that companies can be held liable for what these service providers do on their behalf, so companies should understand how the providers generate the results they offer.
The FTC does not require companies to solicit consumer reviews or post reviews on their websites. However, with this new information, the FTC communicates that it expects companies that publish consumer reviews to do so in a way that gives the public a complete perspective of customer experiences. Even when companies view consumer reviews as a way to promote their business, companies should not choose reviews to give a one-sided impression of customer satisfaction.
FTC rules and guidance can be found here.