A class-action lawsuit against fashion retailer Revolve alleges misleading marketing practices involving undisclosed paid endorsements by social media influencers.
A class-action lawsuit has been filed against the fashion retailer Revolve, alleging that the company engaged in misleading marketing practices on social media. The lawsuit, which seeks $50 million in damages, was submitted recently in the Central District Court of California. It claims that Revolve utilized a controversial advertising strategy that involved influencers disguising paid endorsements as organic recommendations, potentially deceiving over a million consumers.
The lawsuit’s lead plaintiff, Ligia Negreanu, stated that had she been aware that influencers were financially compensated for promoting Revolve’s products, she would have reconsidered her purchases, particularly as some items were priced 10% to 40% higher than similar products offered by other retailers. “For many years, Revolve used its position, payments and free merchandise to entice influencers to endorse and promote its products while failing to disclose any material relationship with the brand,” the lawsuit alleges.
The complaint highlights Revolve’s reliance on social media influencers to market its clothing rather than traditional advertising methods. Although federal guidelines from the Federal Trade Commission (FTC) specify that influencers are required to clearly disclose any material connections to brands—using labels such as “paid partnership” or hashtags like #ad—the lawsuit argues that Revolve’s influencers often only tagged the company without any such disclosure. Attorney Bogdan Enica, representing Negreanu, emphasized that “the problem comes when you don’t disclose,” reiterating the FTC’s requirements for transparency in influencer marketing.
Additionally, the lawsuit points to Revolve’s potential legal vulnerabilities, referencing its own warnings in its annual report regarding the risks associated with non-compliance by its influencer partners. Earlier this year, the National Advertising Division of the Better Business Bureau had recommended that Revolve enhance the clarity of its influencers’ posts to better denote their material connections in light of concerns about misleading advertising.
Revolve Group, based in Cerritos, has seen significant business growth, reporting net sales of $1.1 billion for the 2024 financial year—a 6% increase from the previous year. Specifically, its profits surged by 73%, reaching $48.8 million. Despite this positive financial trajectory, Revolve’s shares experienced a near 4% increase to $20.71 on Monday. However, this has not mitigated a significant decline of approximately 38% in shares over the course of the year.
Revolve has not yet responded publicly to the lawsuit or the allegations regarding its marketing practices. The company, which largely utilizes influencer culture in its marketing strategy, now faces scrutiny over its methods and compliance with consumer protection regulations across multiple states, including violations of the Florida Deceptive Trade Practices Act and the Consumers Legal Remedy Act.
Source: Noah Wire Services
