FTC CRACKED DOWN ON HEY DUDE, INC., FOR VIOLATING ‘RULE’
The FTC’S Mail, Internet, or Telephone Order Merchandise Rule (“Rule”) imposes obligations on merchants who can’t meet advertised shipping time frames.
If there’s a delay, they have to tell you and give you the option to agree to the delayed shipping or cancel the order and get a refund.
If you choose the refund, the merchant must issue it to the original form of payment rather than force you to accept a gift card or store credit.
Hey Dude, Inc., sells shoes to consumers nationwide through its own website and social media advertisements.
It promised that: h “All orders placed Monday-thursday are processed and shipped within 1 business day.”
h “Orders placed Friday afternoon-sunday will be processed the following Monday.”
In September, Hey Dude settled FTC charges that it didn’t comply with the Rule. It didn’t notify customers of shipping delays, failed to issue prompt refunds, and issued gift cards instead of issuing refunds to the original form of payment. The FTC said the company didn’t even maintain records sufficient to provide the proper notices and refunds.
Hey Dude received over 1,000 complaints and suppressed reviews
A local consumer complained to the BBB three days before Christmas last year that an order he placed a month and a half earlier still hadn’t been received and he couldn’t find any way to contact the company other than through emails it didn’t respond to. If he had checked out Hey Dude with the BBB before placing the order, he would have seen that over 1,000 complaints had been filed by other customers, hundreds of which the company never responded to.
The FTC said Hey Dude also suppressed negative customer reviews on its website, a violation of the FTC Act. A statement on each product page of the website claimed to feature “Real, unedited reviews from HEYDUDE fans” and included ratings on a five-star scale. The company used a third-party online product review management interface that allowed it to post five-star reviews automatically, but held lowerstarred reviews for individualized handling.
The FTC said the company actually had a written policy instructing its staff to only publish certain kinds of reviews if they were positive. It held, rejected, or didn’t publish more than 80% one-, two-, and three-star reviews. It only started publishing all reviews after it learned of the FTC’S investigation.
Jeff Bridges’ ‘The Dude’ character inspires advice to online sellers
The settlement with the FTC requires Hey Dude to pay a penalty of $1.95 million, reform its practices to comply with the Rule, and publish all customer reviews.
In the movie “The Big Lebowski,” Jeff Bridges called himself “the Dude or His Dudeness or Duder or El Duderino.” In writing about the Hey Dude case, FTC Attorney Lesley Fair drew upon the movie to offer tongue-in-cheek advice to other online sellers:
h “This is bowling. There are rules.” 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.
h “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.
h “Strikes and gutters, ups and downs.” It’s a mistake for companies to solicit reviews and then cherry pick just the good ones for publication.
Randy Hutchinson is president & CEO Better Business Bureau of the Mid-south.