The Federal Trade Commission (FTC) fined direct-to-consumer shoe brand Hey Dude Shoes for failing to fulfill orders and refusing to provide timely refunds.
Hey Dude Inc., a subsidiary of Crocs Inc. since last year, agreed this week to pay the FTC $1.95 million to settle allegations that the company posted negative reviews on its e-commerce website. suppressed the website and breached the Commission’s postal, internet or telephone ordering rule. The company did not inform customers about the status of late orders and canceled those orders when a product was unavailable. Instead of issuing refunds for goods ordered but not shipped — as the rule requires — the company issued gift cards redeemable through its e-commerce store.
Between 2020 and 2022, Hey Dude Shoes’ third-party online management review interface automatically published all five-star reviews on its website “with little oversight,” according to the FTC. In many cases, the brand withheld negative comments from the public. The complaint alleged that Hey Dude’s written policies and procedures directed employees to select positive reviews for publication. Hey Dude Shoes only began publishing all product reviews after it found out the FTC was conducting an investigation, the complaint says.
“As this case makes clear, when retailers post consumer reviews online, they cannot suppress negative reviews to paint a misleading picture of the consumer experience,” said Samuel Levine, director of the FTC Bureau of Consumer Protection. “And if retailers don’t ship their goods on time, they must give shoppers the opportunity to cancel their orders and get their money back promptly.”
The court order announced Monday requires Hey Dude Shoes to address its past conduct and change its protocols. The order would bar the company from further violating the Mail Order Rule and prohibit it from misrepresenting the opinions of consumers by requiring it to publish every review it receives, including those previously withheld.
If the U.S. District Court for the District of Nevada, where the lawsuit was filed, issues the final order, the $1.95 million penalty will be used to reimburse consumers who were denied refunds for undelivered orders. “We will continue to hold online retailers accountable for violations of the FTC Act and other laws we enforce,” Levine said.
In July, Crocs, the parent company of Hey Dude Shoes, lowered the brand’s second-half outlook after disappointing wholesale performance dampened second-quarter sales growth. In an earnings call, Crocs CEO Andrew Rees discussed the brand’s biggest wholesale distribution challenges related to the transition from a small distribution center in Las Vegas to a larger warehouse nearby. Crocs expects to open the warehouse and transition Hey Dude Shoes to a new ERP system by the end of the year.
Hey Dude Shoes did not immediately respond to a request for comment.
https://sourcingjournal.com/footwear/footwear-brands/crocs-hey-dude-federal-trade-commission-fine-1-million-product-reviews-delivery-454738/ Crocs’ “Hey Dude” shoe brand has been fined $1.95 million by Federal Watchdog – Sourcing Journal