Hundreds of thousands of shoppers affected by Fashion Nova’s violations of the Federal Trade Commission’s rules will soon receive refunds.
The agency said yesterday that it would send out payments totaling more than $6.5 million to 518,552 customers — including more than 40,000 people who live outside the United States — across 169 different countries. Each consumer will get $12.60, with the majority of the payments to be sent via PayPal to the email addresses of affected shoppers, while the remainder will receive paper checks.
The FTC shared that customers who expect to receive their refunds through PayPal have already been contacted via email. They will have 30 days to accept the payment. Paper checks, on the other hand, will expire in 90 days.
In addition to the payments, the FTC’s order required Fashion Nova to refund some consumers directly as part of a previously announced settlement.
Last April, the agency reported that the online fashion retailer had violated the Mail, Internet or Telephone Order Merchandise Rule. Under the terms of the settlement, Fashion Nova agreed to pay shoppers a total of $9.3 million after it failed to property notify consumers of delays and give them the opportunity to cancel their orders when it was unable to ship merchandise in the time frame specified for delivery. The FTC added that the company illegally used gift cards to compensate customers for unshipped products instead of providing refunds.
Of that total, $7.04 million was to be sent to the FTC, while the remaining $2.26 million would be refunded directly by Fashion Nova to its shoppers who received gift cards. (Gift cards are also not considered refunds under the Mail Order Rule’s requirements.)
“The same rules that we have enforced for nearly 50 years against catalogers and other mail-order companies also apply to online sellers,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said at the time. “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.”
In a statement to FN, a Fashion Nova spokesperson said that the issues had stemmed from “exponential growth” in 2017, which “taxed our warehouse and IT systems.” The spokesperson added that the company resolved those problems in April 2018 and “fully cooperated” with the FTC’s Mail Order Rule once brought to its attention.
“We have made additional investments in our operating systems, training and help center to further optimize support to our customers,” the spokesperson explained. “We are proud of who 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.”
This story was updated with a statement from Fashion Nova.