With $4.2M Fine, FTC Kills 'Review Gating'
The agency signaled it's going to get tough on brands and platforms that engage in review manipulation.
- Fashion Nova agreed to pay $4.2 million for “review gating” and suppressing negative consumer reviews. Yotpo was the review platform.
- The FTC sent a letter to 10 review management platforms directing them to not "take improper steps to avoid collecting or publishing negative reviews."
- The agency also issued new, very specific guidance for marketers and brands on impermissible behaviors in the consumer-review space.
Yesterday the FTC announced that online fast-fashion retailer, Fashion Nova had agreed to pay a $4.2 million fine for selectively not publishing negative product reviews. Fashion Nova also agreed it will no longer suppress customer reviews.
The FTC complaint alleged that Fashion Nova had "misrepresented that the product reviews on its website reflected the views of all purchasers who submitted reviews, when in fact it suppressed reviews with ratings lower than four stars out of five. The case is the FTC’s first involving a company’s efforts to conceal negative customer reviews."
(This is not Fashion Nova's first brand controversy.)
Yotpo Was the Platform
Using online review platform Yotpo, Fashion Nova automatically posted 4 and 5 star reviews to its website, but held back lower starred reviews for "company approval." However the company never approved or posted "the hundreds of thousands of lower-starred, more negative reviews."
In November of 2020, the FTC investigated whether Yotpo's "star-rating and sentiment filters provided its clients with the means and instrumentalities to easily and deceptively suppress negative product reviews," resulting in potentially deceived consumers who could have believed the published reviews accurately represented all customers.
At the time, the FTC did not recommend enforcement because Yotpo committed to implement "clear and prominent guidance to its clients on their need to promptly post reviews, including negative reviews."
In January of 2021, Yotpo alerted brands that were using their auto-publishing feature that they needed to take action on all withheld reviews or they would be automatically published. Yotpo noted at the time, "while we allow a 14-day window, the FTC may require brands to moderate and make decisions about posting in a much shorter time period."
What the FTC decided was that all reviews, positive AND negative, needed to be treated the same. If any were held back, all needed to be held back. Holding only negative reviews for curation has been inappropriate.
Why Fashion Nova Matters
This ruling is significant for several reasons. It is the first case focused solely on reviews with such a significant fine, and puts the world on notice that the FTC is finally putting a stake in the ground around abusive review practices. The vote was unanimous and non-partisan (4 - 0) in favor of issuing the complaint and accepting the consent agreement with Fashion Nova.
Simultaneously, the FTC announced that it sent letters to "10 companies offering review management services, placing them on notice that avoiding the collection or publication of negative reviews violates the FTC Act."
In the letter (above), the agency made clear that review management services should not "take improper steps to avoid collecting or publishing negative reviews."
The letter clearly indicts review gating and negative review suppression: "Examples may include asking for reviews only from those likely to leave positive ones, preventing or discouraging submission of negative reviews, subjecting negative reviews to greater scrutiny, refusing to publish negative reviews, or otherwise not treating positive and negative reviews equally."
Review Platforms on Notice
This letter, putting review management platforms on notice, would allow the FTC to impose stiff penalties if any of these companies continue to partake in any of these practices. The FTC did not identify the review management platforms that received the notice nor the specific website phrasing that was highlighted in the letter.
In addition, the FTC finally released "new guidance for online retailers and review platforms to educate them on the agency’s key principles for collecting and publishing customer reviews in ways that do not mislead consumers."
Historically this guidance was included in the overall testimonial and influencer guidelines but lacked details. These new rules are extremely explicit and clearly ban review gating (only asking happy customers), provide rules around incentives, and require the publication of all genuine reviews.
We have long supported efforts of the FTC becoming more involved in the fight against fake reviews and dishonest review practices. In the past many of those efforts have been half-hearted. With the many FTC publications over the past few days, it appears that those days are over.
We hope to unpack what all this means to review management platforms and businesses going forward over the next few days.
Other posts in this series on the FTC:
Mike Blumenthal
Mike Blumenthal
Mike Blumenthal
Mike Blumenthal