The Federal Trade Commission (FTC) has taken action against online stores that suppress negative reviews, with Hey Dude Inc., a subsidiary of Crocs, being the latest retailer to face scrutiny. The company has been found to promote positive reviews while burying low-star ratings.
As a result, Hey Dude has been ordered to pay $1.95 million in a settlement to compensate consumers who were misled by the company’s actions. The fine will be utilized to issue refunds to affected customers. Hey Dude has been found guilty of multiple violations of the Commission’s Mail, Internet, or Telephone Order Merchandise Rule between 2020 and 2022.
Under this rule, retailers are prohibited from concealing unfavorable customer reviews. Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection, emphasized the importance of transparency, stating that retailers must not suppress negative reviews to create a misleading image of the consumer experience. Additionally, retailers are required to offer customers the option to cancel orders and promptly receive refunds in cases where merchandise is not delivered as promised.
The prevalence of such practices has led to a growing difficulty for consumers to trust customer reviews and ratings, even on reputable platforms like Amazon. The challenge ranges from fabricated five-star reviews to instances like Hey Dude, where negative ratings are concealed to promote only positive scores.
Hey Dude employed a third-party service to manage its online reviews, instructing staff to exclusively post five-star reviews on their website while rejecting any negative feedback. This lack of transparency deceives consumers who rely on accurate reviews to make well-informed purchasing decisions.
Furthermore, Hey Dude, previously known as Happy One, violated FTC regulations by failing to notify customers about shipping delays when they were unable to fulfill orders within the specified timeframe. The company also neglected to provide timely refunds or honor order cancellations. In cases where refunds were granted for undelivered orders, customers were compensated with gift cards instead of being reimbursed through the original payment method, a violation of FTC rules.
While Crocs has yet to comment on the matter, the FTC revealed that Hey Dude began publishing all consumer reviews only after becoming aware of the investigation. A court order is now being proposed to enforce necessary changes in the retailer’s practices, which will entail Hey Dude being prohibited from further violating the Mail Order Rule. Additionally, the company will be required to publish all reviews, including those that were previously hidden, and will be barred from misrepresenting consumers.
Levine emphasized the FTC’s commitment to holding online retailers accountable for any violations, stating that enforcement of the FTC Act and other relevant laws will continue. The FTC encourages consumers to report instances of fraud, scams, and other unethical business practices through the “Report Fraud” platform, as the agency takes fraud seriously and aims to protect consumers’ interests.
