(Filed Under wholesale Lingerie News). Online retailer Fashion Nova “will pay $9.3 million to settle Federal Trade Commission charges that it didn’t properly notify consumers and give them the chance to cancel their orders when it failed to ship merchandise in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds.”
According to the FTC, “the money will be used to refund consumers who were harmed by the company’s violations.” According to Andrew Smith, director of the FTC’s bureau of consumer protection, “The same rules that we have enforced for nearly 50 years against catalogers and other mail-order companies also apply to online sellers. 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 FTC said Fashion Nova violated its rules “in two ways. First, the company made clear promises to consumers for years that they offer fast shipping of their products. This includes using phrases like “Fast Shipping,” “2-Day Shipping,” and “Expect Your Items Quick!” In fact, the company regularly failed to meet its shipping promises to consumers.”
“The complaint also alleges that Fashion Nova at times failed to refund consumers for the items that it did not ship. Instead, it was the company’s policy to issue gift cards, which are not considered refunds under the Mail Order Rule. The company also failed to cancel orders and provide refunds when it did not offer consumers delay option notices.”
Of the $9.3 million in the proposed settlement, “$7.04 million will be sent to the FTC for use in refunding consumers and $2.26 million must be refunded directly by the company to consumers. Consumers who received gift cards instead of refunds when the company violated the Mail Order Rule will be eligible for refunds under the settlement.”
The FTC added that the “settlement also 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.”
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