The FTC announced an enforcement action against online shoe seller Hey Dude, Inc. (a subsidiary of Crocs, Inc.) alleging Hey Dude suppressed more than 80% of consumer reviews that provided less than four out of five stars. The complaint also alleges multiple violations of the FTC’s Mail Order Rule between 2020 and 2022. A proposed consent order would require Hey Dude to pay nearly $2 million and take certain steps to prevent future violations.
According to the FTC, Hey Dude used a third-party online management review tool to publish primarily positive consumer reviews while declining to publish more critical reviews. The agency also claims Hey Dude issued written policies and procedures directing staff to publish only positive reviews and that the company only began publishing all consumer reviews after the FTC initiated its investigation. The Commission also alleges Hey Dude violated the Mail Order Rule by failing to notify consumers of shipping delays, failing to cancel delayed orders and issue timely refunds, and failing to send prompt refunds of the original payment to consumers whose orders were not shipped.
Under the terms of the proposed consent order, Hey Dude would be required to pay $1.95 million, which the FTC has indicated will go to refunding consumers injured by Hey Dude’s misconduct. The order would also prohibit Hey Dude from future violations of the Mail Order Rule and require Hey Dude to publish all reviews it receives, including previously withheld reviews, with narrow exceptions for inappropriate content.
The Hey Dude case is only the latest example of the FTC’s heightened focus on how businesses solicit and use customer reviews. Recently, the Commission published a Notice of Proposed Rulemaking intended to crack down on deceptive consumer reviews and endorsements.
Copyright © 2023, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume XIII, Number 258
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