Revolve's $50 Million Lawsuit: Are Influencers Misleading Consumers?

Revolve Faces Major Legal Challenge

Popular Gen Z retailer Revolve is currently embroiled in a $50 million lawsuit that accuses the brand of using deceptive social media marketing tactics to mislead at least a million consumers. The class-action suit, filed on Friday in California Central District Court, claims that the Cerritos-based online retailer operated an advertising "scheme" where influencers disguised paid endorsements as genuine recommendations to inflate Revolve’s sales.

The lawsuit states, "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."

Key Allegations

Lead plaintiff Ligia Negreanu claims that if she had known the posts were sponsored, she would have refrained from purchasing Revolve’s products, which were priced 10% to 40% higher than those of competing retailers.

The lawsuit is seeking $50 million in damages, listing Revolve’s affiliate companies and three influencers as co-defendants. It emphasizes that FTC-mandated disclosures should be “difficult to miss,” such as the “paid partnership” label recommended by Meta or the #ad hashtag. However, the complaint notes that Revolve’s influencers often merely tagged the brand’s Instagram account without proper disclosure.

Legal Framework and Risks

Bogdan Enica, one of Negreanu’s attorneys, stressed the importance of disclosure, citing guidelines established by the Federal Trade Commission that require influencers to reveal any “material connection” with the brand they endorse. In its 2023 annual report, Revolve acknowledged the risk of litigation if its influencer-partners fail to adhere to these guidelines.

Earlier this year, the National Advertising Division of BBB National Programs recommended that Revolve modify influencer posts to ensure clear and conspicuous disclosures of material connections.

Broader Implications

The lawsuit claims Revolve violated the Florida Deceptive Trade Practices Act, the Consumers Legal Remedy Act, and the Unlawful Business Practices Act, along with consumer protection laws across more than 20 states.

Despite these legal challenges, Revolve Group reported net sales of $1.1 billion in 2024, a 6% increase from the previous year, with profits rising 73% to $48.8 million. However, shares of the online fashion retailer fell 38% this year, although they rose nearly 4% to close at $20.71 on Monday.