Fashion Nova settlement: FTC sending more than $6.5M to consumers

CHICAGO (WLS) -- The Federal Trade Commission announced that it is sending payments totaling more than $6.5 million to consumers as part of a settlement with Fashion Nova.

The payments will be issued to more than 500,000 consumers who were affected by the online retailer's violations of the FTC's Mail, Internet, or Telephone Order Merchandise Rule, according to the agency.

The FTC said Fashion Nova, "promised consumers fast shipping of their orders but regularly failed to meet those promises, didn't properly notify consumers of shipping delays, and didn't give them the chance to cancel their orders and receive prompt refunds. The company also illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds. Gift cards are not considered refunds under the requirements of the Mail Order Rule."

Customers receiving a refund from the FTC will get a payment of $12.60 each.

According to the FTC, the vast majority of the payments are being sent via PayPal to the email addresses of affected consumers; a few consumers will receive payments via paper check.

In a statement to the ABC 7 I-Team, Fashion Nova said:

"Fashion Nova resolved these issues three years ago in April 2018. We fully cooperated with the FTC's detailed mail order rule requirements once brought to the Company's attention. These issues stemmed from exponential growth in 2017 which taxed our warehouse and IT systems. Since then, we have made additional investments in our operating systems, training, and Help Center to further optimize support to our customers. 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."

To learn more about the settlement, visit the FTC's website.