Fashion Nova, which rocketed to Instagram fame with its skintight, celebrity-endorsed apparel, has agreed to pay $4.2 million to settle accusations it stopped bad reviews from being posted about it online.

The company, which built its name on low-cost clothing touted by stars like Cardi B and Megan Thee Stallion, misled customers about its fast-fashion brand by manipulating the reviews on its website, the Federal Trade Commission said. The company disputes the allegations.

According to the FTC complaint, Fashion Nova employed a system that automatically published four- and five-star reviews but held lower-starred reviews back for company approval.

Hundreds of thousands of negative reviews were never posted from 2015 to 2019, the federal agency said.

Suppressing unfavorable reviews "deprives consumers of potentially useful information and artificially inflates the product's average star rating," the agency said.

The case is the first of its kind in the U.S. and could lead to other companies being punished for concealing negative reviews, the FTC said.

"Deceptive review practices cheat consumers, undercut honest businesses, and pollute online commerce," the federal agency's Samuel Levine said. "Fashion Nova is being held accountable for these practices, and other firms should take note."

Company pushes back

Fashion Nova did not intentionally hide reviews and corrected the problem as soon as company officials became aware in 2019, the company said in a statement.

"The Federal Trade Commission’s allegations against Fashion Nova are inaccurate and deceptive," the statement said. "Fashion Nova is highly confident that it would have won in court and only agreed to settle the case to avoid the distraction and legal fees that it would incur in litigation."

The company said it "inadvertently" failed to publish some reviews during a period of rapid growth when it lacked the resources to manually inspect lower-starred reviews that were held back for additional approval.

"That issue was remedied several years ago and all previously unpublished reviews have now been posted to the extent they are actually about the product they were submitted for and do not contain profanity, do not contain threatening language and comply with other reasonable terms," the statement said.

The company "does its best to listen carefully to customer feedback every day" and "prides itself on knowing that 80% of its business comes from repeat customers," Fashion Nova said.

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Other potentially illegal practices scrutinized

Fashion Nova has been in trouble before.

The company agreed to pay $9.3 million in 2020 to settle allegations it prevented customers from canceling their orders when shipping was delayed and used gift cards to compensate for unshipped merchandise instead of disbursing refunds.

The U.S. Department of Labor and a New York Times investigation in 2019 found Fashion Nova contracted with dozens of factories in the United States that owed employees millions in back wages, paid some workers as little as $2.77 an hour and had unsanitary conditions.

In addition to paying $4.2 million to settle the latest case, Fashion Nova agreed to post all reviews of products currently being sold (except any that contain obscene, sexually explicit, racist or unlawful content or that are unrelated to products or customer service) and to not make misrepresentations about reviews in the future, the FTC said.

Cracking down on review manipulators

The FTC is also turning up the heat on companies that provide "review management services" to online retailers like Fashion Nova.

The agency warned 10 firms that handle web reviews for other businesses that it is illegal to avoid collecting or publishing negative reviews.

In October, the commission notified 700 top American brands to be careful about following the law when it comes to reviews and endorsements.

Businesses can learn what's legal and illegal by checking out a new FTC guide.

Consumer reporter Rebekah L. Sanders investigates issues of fraud and abuse involving businesses, health care and government agencies. Contact her at rsanders@azcentral.com or follow her on Twitter at @RebekahLSanders.

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This article originally appeared on Arizona Republic: Fashion Nova in trouble over reviews. Why other retailers may be next