Fashion Nova to pay $9.3m to consumers after violating FTC policies

By

Gabriella Lacombe

Published
Apr 23, 2020

Fast-fashion retailer Fashion Nova is set to pay $9.3 million in settlement fees for violating shipping and refund policies after reaching an agreement with The Federal Trade Commission.

The complaint filed by the FTC alleged that the online retailer "violated the agency’s Mail, Internet, Or Telephone Order Merchandise Rule (the Mail Order Rule), which applies to merchandise sold to consumers online, by mail, or by phone." 

Under the complaint, Fashion Nova was alleged to have regularly failed to meet its shipping promises to customers, which were advertised using language like "fast" and "2-day" shipping, 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 a prompt refund, and failed to cancel orders and provide refunds when it did not offer consumers delay option notices.

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In addition, the FTC further alleged that Fashion Nova at times failed to refund consumers for items that didn't ship, and instead chose to issue gift cards, which are not considered refunds under the Mail Order Rule.

Of the total $9.3 million payment, $7.04 million will be sent to the FTC for use in refunding consumers and $2.26 million must be refunded directly to consumers. Fashion Nova customers who received gift cards instead of refunds when the company violated the Mail Order Rule will be eligible for refunds under the settlement.

“The same rules that we have enforced for nearly 50 years against catalogers and other mail-order companies also apply to online sellers,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. 

“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.”

The settlement prohibits Fashion Nova from any further violations of the Mail Order Rule, and requires the company to ship ordered merchandise within one day of receipt of an order when the company doesn’t specify a shipping date, the FTC said. 

FashionNetwork.com has reached out to Fashion Nova, but has yet to receive comment. In a statement given to Business Insider, the company said the issues "stemmed from exponential growth in 2017 which taxed our warehouse and IT systems."