FTC says this Dude didn’t abide – by the law, that is

In the words of Jeff Bridges’ character in the cult classic The Big Lebowski, “I’m the Dude or His Dudeness or Duder or El Duderino, if you’re not into the whole brevity thing.” He’d also probably answer to Hey Dude, which – ironically enough – is the name of a shoe company that just settled an FTC action for $1.95 million for alleged violations of the FTC Act and the Mail, Internet, or Telephone Order Merchandise Rule. What’s more, the complaint charges that Hey Dude Shoes posted five-star consumer reviews on its website, but didn’t publish less favorable reviews. To paraphrase The Dude, “This suppression will not stand.”

Hey Dude advertises its shoes on its own website and via social media, making express claims about how quickly it would ship products. In some ads, Hey Dude promised, “All orders placed Monday-Thursday are processed and shipped within 1 business day. Orders placed Friday afternoon-Sunday will be processed the following Monday.”

But according to the FTC, Hey Dude engaged in a host of illegal fulfillment and refund practices. Among other things, the complaint alleges that in numerous instances:

• Hey Dude didn’t honor its shipping promises;
• When items weren’t going to ship on time, Hey Dude failed to clearly offer buyers the option of either consenting to the delay or cancelling their order and getting a prompt refund, as required by the Mail, Internet, or Telephone Order Rule;
• When Hey Dude didn't ship on time, rather than refunding the purchase price to consumers’ original form of payment, Hey Dude gave some of them gift cards that could be used only on the Hey Dude website; and
• Hey Dude didn’t maintain records sufficient to provide consumers with notification of shipping delays, issue prompt refunds, or otherwise assure Rule compliance.

The FTC also alleges that Hey Dude engaged in deceptive practices regarding consumer reviews. A statement at the bottom of each product page claimed to feature “Real, unedited reviews from HEYDUDE fans” and included ratings on a five-star scale. Hey Dude used a third-party online product review management interface that allowed it to post five-star reviews automatically, but held lower-starred reviews for individualized review. According to the complaint, through June 2022, Hey Dude held, rejected, or didn’t publish more than 80% of their one-, two-, and three-star reviews. Indeed, until June 2022, the company had a written policy instructing its staff to publish certain types of reviews only if they were positive in nature. Therefore, the company allegedly violated the FTC Act by falsely representing that the product reviews on its website accurately reflect the views of all buyers who submitted reviews of Hey Dude products to the site.

In addition to the $1.95 million financial remedy, the proposed court order bars future violations of the Mail, Internet, or Telephone Order Rule. It also prohibits Hey Dude from making misrepresentations about consumer reviews and requires the company to publish all reviews it receives, including those it previously withheld from publication. (The order includes a limited exception for content moderation to screen out reviews that contain profanity, discriminatory statements, the disclosure of personal information, or certain sensitive commercial or financial information.)

What can other companies take from the FTC action in this case? We again turn to The Big Lebowski for compliance wisdom.

“This is bowling. There are rules.”  And there are also rules for how companies must honor their shipping and fulfillment responsibilities. The Mail, Internet, or Telephone Order Rule spells out the requirements with specificity. But what if a company experiences delays in the supply chain? The Rule anticipates that sometimes – to paraphrase The Dude – glitch happens and explains the options companies must offer consumers to stay on the right side of the law. 

“They did not receive the money. This is our concern, Dude.”  It’s the FTC’s concern, too, when consumers don’t receive prompt refunds or when companies give gift cards – rather than real refunds – in response to unshipped orders.

“Strikes and gutters, ups and downs.” Truthful product reviews are highly material to consumers, but let’s face it: There will be customers who love a company’s products and services and others who aren’t so happy. It’s a mistake for companies to solicit reviews and then cherry pick just the good ones for publication. The better response to those “gutters” and “downs” is to use them to improve your products and processes – and earn those five-star reviews the non-deceptive way. 

“This isn’t a very complicated case. You know, with a lotta ins, a lotta outs, lotta what-have-yous.”  The FTC offers to-the-point materials to help streamline your compliance obligations. The Business Guide to the FTC’s Mail, Internet, or Telephone Order Merchandise Rule gives step-by-step advice for dealing with fulfillment and shipping issues. Soliciting and Paying for Online Reviews: A Guide for Marketers, FTC’s Endorsement Guides: What People Are Asking, and other resources on the FTC’s Endorsements, Influencers, and Reviews portal can help keep your consumer review practices compliant.

Because when it comes to protecting consumers from deceptive or unfair practices, the FTC abides, Dude.