The singer filed a lawsuit in federal court in California on Monday, saying the firm published at least 30 "unauthorised" images and videos that suggested she had endorsed the brand. She also said the company hired a model with an "uncanny" resemblance to Grande for some of its social media posts.
She said this followed the breakdown of talks for a joint marketing campaign because Forever 21 would not pay enough for "a celebrity of Ms. Grande's stature", whose longer-term endorsements generate millions of dollars in fees.
"Rather than pay for that right as the law requires, defendants simply stole it", the Grammy Award winner and best-selling singer said in the complaint.
The "misleading campaign" occurred primarily in January and February of 2019, before the release of Ms Grande's album, "Thank U, Next", according to the suit.
"Forever 21 does not comment on pending litigation as per company policy", the company said in a statement. "That said, while we dispute the allegations, we are huge supporters of Ariana Grande and have worked with her licensing company over the past two years. We are hopeful that we will find a mutually agreeable resolution and can continue to work together in the future".
John Coldham, a partner at law firm Gowling WLG, said the Ariana Grande case "should act as a stark warning to brand owners to be very careful about using celebrity images and ensuring they are not implying an endorsement".