Fashion Nova, accused by the Federal Trade Commission of failing to deliver on its claims of speedy delivery, has been on notice and making amends.
The California-based fashion brand has agreed to pay $9.3 million to resolve the FTC’s complaint that it didn’t properly inform or compensate consumers whose orders were delayed or didn’t arrive, the agency said Tuesday.
In a complaint filed Monday in California federal court, the agency claimed that Fashion Nova had touted fast deliveries on its web site, including “Free 2 Day Shipping on all U.S. Orders $75 and Up,” and “Fast Canada Shipping Only $10,” but didn’t always uphold those assurances.
The proposed settlement, filed the same day, also calls for the company to ship products “within one day of receipt of an order when the company doesn’t specify a shipping date,” according to the agency.
Fashion Nova said it has cooperated with the FTC and that it resolved the issues in April 2018, according to a statement Tuesday by a company representative.
“These issues stemmed from exponential growth in 2017, which taxed our warehouse and IT systems,” the Fashion Nova representative said in the statement. “We are proud of who we are and where we are going and are pleased to be putting this matter behind us so that we can continue to focus on our customers.”
The FTC claimed that consumers received incomplete shipments, or products that weren’t what they ordered, including “merchandise that was a different size, damaged, or used,” according to the complaint.
The agency had claimed also that in a number of cases where the brand allegedly didn’t ship the ordered items, the company neither canceled the order nor provided a “prompt refund,” according to the complaint. And rather than refunds for unshipped items, the company often provided Fashion Nova gift cards valued at the cost of the undelivered products, according to the complaint.
The company also did not properly alert customers to potential shipping delays and give them the option to cancel orders that had been held up, the agency said.
Fashion Nova’s alleged conduct violated the FTC’s Mail, Internet or Telephone Order Merchandise Rule, known as the Mail Order Rule, according to the agency. Gift cards don’t count as refunds under the Mail Order rule, the agency said.
“The same rules that we have enforced for nearly 50 years against cataloguers and other mail-order companies also apply to online sellers,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in the statement.
“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,” he said.