FTC Reminds E-Tailers About Mail-Order Rule

The Federal Trade Commission sent letters to more than 100 e-tailers last week to help them understand their obligations under the Mail or Telephone Order Merchandise Rule, which spells out the regulations for making promises about shipment time periods, notifying consumers about unexpected delays and refunding consumers' money.

The rule applies to merchandise ordered over the Internet as well as by telephone, fax or mail.

The FTC's Division of Enforcement and the Western and Northwestern Regional Offices sent the letters after announcing its staff had surfed more than 200 Internet retail sites searching for shipment promises made to entice consumers to their sites this holiday season.

The FTC staff found that nearly 100 of these sites made “quick-ship claims” that assured consumers that in-stock items usually ship within 24 to 48 hours after an order is placed.

Last holiday season, the FTC said, many Internet sellers made quick-shipment claims, from overnight to 48 or 72 hours. Some sellers, however, were unable to meet those shipment claims, resulting in disappointed customers.

The FTC also brought civil penalty actions against seven well-known e-tailers for allegedly violating the Rule. Dubbed Project TooLate.com, the FTC's complaints included allegations that the companies made quick-shipment claims for which they had no reasonable basis and failed to properly notify consumers when late shipments occurred. The companies paid more than $1.5 million in total penalties.

This year, 35 million online holiday shoppers are expected to make purchases online, up from 20 million last year, according to some estimates.

The FTC's letter said, “As we enter the holiday shopping season, we want to be sure you are aware of and comply with applicable federal regulations.”

It also offered the following tips:

• Base shipment claims on facts, not hopes. The rule requires that sellers have a reasonable basis for stating that a product can be shipped within a certain time.

• Shipment representations in ads or Web sites can be revised before sellers accept an order. The rule permits sellers to notify consumers at any time before they complete their order that shipment may take longer than the originally advertised time, provided sellers have a reasonable basis for that new shipment time.

• If sellers unexpectedly cannot ship within the promised time, they must notify the consumer of the delay within the original shipment time. For example, notification of a delayed “48-hour” shipment must be provided to the consumer in that 48-hour period.

• When sellers notify customers, they must explain that the buyers have a right to cancel the transaction and get a full and prompt refund. Sellers also must provide a revised shipment date.

• Sellers' obligations to ship begins when they receive all the information needed to process the order. The shipment clock starts ticking as soon as payment information is received from the customer. It does not matter whether sellers actually process the payment at the time of the order.

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