Individual, identified as Heydude, agrees to compensate the Federal Trade Commission to the tune of $1.95 million, fulfilling charges levied against them
Unfiltered, Uncensored Take: Heydude, the shoe brand owned by Crocs, has conceded to settle charges with the Federal Trade Commission (FTC). The brand will cough up a whopping $1.95 million in monetary relief after being accused of suppressing negative reviews and skirting the FTC's Mail, Internet, or Telephone Order Merchandise Rule.
An FTC press release on Monday confirmed the settlement, revealing that Heydude had breached the FTC's Mail, Internet, or Telephone Order Merchandise Rule between 2020 and 2022. The brand allegedly failed to issue shipping delay notices, neglected to cancel orders and provide refunds after not issuing such notices, and swindled consumers with gift cards instead of refunds for unshipped orders.
The $1.95 million in monetary relief is supposed to be used to reimburse affected consumers. If the court signs off on the proposed order, Heydude will also be compelled to publish all reviews without limitations, except in a few specific cases. The FTC contends that Heydude had been suppressing negative reviews, even rejecting and withholding more than 80 percent of reviews that received fewer than four stars out of five.
"Online retailers can't paint a deceitful picture of the customer experience by suppressing negative reviews," said Samuel Levine, director of the FTC's Bureau of Consumer Protection. "If retailers can't deliver merchandise on time, they have to give customers the option to cancel orders and promptly refund their money."
The FTC asserts that Heydude, utilizing a third-party online management review interface, preferentially posted only the highest reviews on its website while disregarding and rejecting many less-favorable reviews. The FTC's complaint alleges that Heydude's written procedures and policies dictated that only positive reviews should be published. However, the brand started publishing all reviews once it learned that it was under investigation.
Interestingly, Crocs agreed to buy Heydude for a whopping $2.5 billion in 2021, a deal that included $2 billion in cold, hard cash. Crocs remains optimistic about the resolution, stating, "Since our acquisition of the company, we have cooperated diligently with the FTC to resolve this matter swiftly and satisfactorily, and we are glad to have this behind us and move forward with the exceptional customer experience, transparency, and accountability for which Crocs' brands are renowned."
Despite the setback, Heydude's revenues have shown a glimmer of hope. In Q2 this year, Heydude reported a revenue increase of 3% to $239.4 million, with nearly a 30% uptick in Direct-to-Consumer (DTC) revenue. Crocs announced in July that it had reached over $1 billion in quarterly consolidated revenue during Q2, an 11.2% year-over-year bump. Stay tuned for more on the ever-evolving world of retail.
- Concerns about online retailers' practices extend beyond payment matters, as the Federal Trade Commission (FTC) is currently scrutinizing the use of Artificial Intelligence (AI) and technology in manipulating consumer feedback, such as suppressing negative reviews.
- As the global trade landscape increasingly leans on the internet and e-commerce, policymakers and regulators, including the FTC, are debating the need for comprehensive and international guidelines to ensure fairness and transparency, preventing harm to consumers and establishing trust in online purchases.
- With the ever-growing influence of technology in trade, warfare tactics might soon shift to a digital front, as nations mount pressure on tech giants and e-commerce platforms to prioritize national interests over global connectivity, potentially threatening the openness and interconnectedness of the internet, which is the lifeblood of modern trade.
