Online shoe retailer Hey Dude, Inc. has agreed to pay $1.95 million to settle charges brought by the Federal Trade Commission (FTC) for deceptive business practices.
The settlement comes in response to allegations that Hey Dude engaged in misleading conduct by suppressing negative customer reviews, and violated the FTC’s Mail, Internet, or Telephone Order Merchandise Rule on multiple occasions between 2020 and 2022.
The FTC’s complaint against Hey Dude, which was acquired by Crocs, Inc. in February 2022, outlines several violations, including failing to issue shipping delay notices to customers when orders couldn’t be fulfilled promptly.
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The company also neglected to cancel orders and provide swift refunds after failing to notify customers of delays. Instead, Hey Dude issued gift cards instead of complying with the rule’s requirement to promptly refund customers for undelivered merchandise.
One of the most significant allegations against Hey Dude was the suppression of negative consumer reviews. The FTC found that Hey Dude selectively posted only five-star reviews on its website while rejecting and not publishing less favorable reviews. It was also revealed that the company’s policies and procedures encouraged staff to publish positive reviews exclusively before June 2022. The change in review publication practices only occurred after Hey Dude became aware of the FTC’s investigation.
As part of the proposed court order, Hey Dude will be required to make significant changes in its operations. The order, subject to court approval, will prevent Hey Dude from future violations of the Mail Order Rule and compel the company to publish all received reviews, including previously withheld ones, with exceptions related to content moderation.
Additionally, Hey Dude will pay $1.95 million to the FTC, with the intention of using these funds to provide restitution to consumers affected by the company’s deceptive practices.
Information for this story was found via FTC, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
