The Federal Trade Commission is cracking down on online stores that suppress negative reviews. Croc-owned Hey Dude Inc. is the latest retailer found to be promoting positive reviews while sweeping low-star ones under the rug.
The FTC ordered Hey Dude to pay $1.95 million in a settlement after the company misled consumers by hiding 80% of reviews rating less than five stars. The fine will be used to issue refunds to customers. Hey Dude is found to have violated the Commission’s Mail, Internet, or Telephone Order Merchandise Rule multiple times from 2020 through 2022.
The rule forbids retailers from hiding unfavorable customer reviews.
“As this case makes clear, when retailers publish consumer reviews online, they cannot suppress negative reviews to paint a deceptive picture of the consumer experience. And when retailers don’t ship merchandise on time, they must give buyers the option to cancel their orders and promptly get their money back,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
This kind of activity is why consumers are finding it more difficult to trust customer reviews and ratings, even on giant retails sites like Amazon. The problem ranges from fake five-star reviews to situations like Hey Dude, where lower ratings are hidden in favor of only positive scores.
Hey Dude used a third party to manage its online reviews and instructed staff to only post five-star reviews on its website while rejecting others. The lack of transparency is deceptive to consumers who rely on accurate reviews to make informed purchasing decisions.
Hey Dude, formerly called Happy One, also violated FTC law by failing to issue shipping delay notices when the store couldn’t fulfill orders as quoted. The company also failed to provide timely refunds or cancel orders. Customers who did receive refunds for orders yet to be shipped were sent a gift card instead of reimbursement via the original payment method, which is also against FTC rules.
“Hey Dude can verify that it has entered into a monetary settlement with the FTC based on alleged violations of the Mail Order Rule which primarily occurred over the holiday months in 2020, prior to Crocs’ acquisition of the company,” said a spokesperson for Crocs. “Contrary to the statement released earlier by the FTC, the monetary portion of the settlement is not related in any way to review suppressions, but instead relates to fulfillment times of a small number of Hey Dude product orders placed online. Since our acquisition of the company, we have worked diligently with the FTC to come to a quick and satisfactory resolution, and we are pleased to put this behind us and move forward with the excellent customer experience, transparency and accountability for which Crocs’ brands are known.”
The FTC said Hey Dude only began publishing all consumer reviews after the company realized it was being investigated. A court order proposed today will require the retailer to change its conduct by barring Hey Dude from continuing to violate the Mail Order Rule. Hey Dude will also be required to publish all reviews and prohibit attempts to misrepresent consumers, including posting negative reviews previously hidden from its online store.
“We will continue to hold online retailers accountable for violations of the FTC Act and other laws we enforce,” said Levine.
The FTC takes fraud seriously and urges consumers to visit Report Fraud to report cases of fraud, scams, and other bad business practices.