FTC Warns E-Tailers About Shipping Promises

The Federal Trade Commission sent letters to more than 50 online retailers recently warning them to follow the Mail Order Rule and other FTC regulations this holiday season.

The letters resulted from the commission's HolidaySmarts.com investigation, which examined the shipping policies of 110 sites offering top-selling holiday items from Oct. 29-31.

The FTC warned 52 sites with 48-hour shipping policies about the need to comply with the Mail Order Rule. The rule requires merchants to ship orders to buyers within the time stated or, if no time is stated, within 30 days. If unable to do so, the merchant must notify the customer of the delay within the original shipment time and provide a revised shipping date. Sites that promise to ship within 48 hours but find they cannot must notify their customers within that period and give them the option to cancel.

Janice Frankle, an FTC attorney, said the letters were sent as a reminder and not because the sites had been found in violation of the rule.

“Perhaps all of the Web sites we contacted ship within that period of time … we are just putting them on notice that if they make this claim, they have to live up to it,” she said, “and if they can't, then they need to send their delay option notice within the time period they promised.”

The FTC did not release the names of any companies it contacted.

In the 1999 holiday season, many top online retailers failed to ship merchandise in a timely fashion or to notify consumers of the delays. As a result, the FTC levied fines totaling more than $1.5 million. E-commerce companies improved their shipping results during the 2000 season.

Despite the improvement, the FTC is concerned that e-commerce companies may disappoint customers this holiday season.

“Some analysts believe that 2001 online holiday shopping sales will exceed last year's holiday e-commerce season,” Howard Beales, the FTC's consumer protection director, said in a statement. “As consumers turn to the Internet for their holiday purchases — from electronic devices, jewelry, clothing to computers — we want to [ensure] that they get what they expect.”

Along with advising online retailers to comply with the Mail Order Rule, the commission advised 52 of the companies to improve their on-site warranty disclosures for warranted goods.

The FTC's Warranty Rule requires e-commerce companies to adequately disclose the terms of warranties on all warranted goods over $15. To comply, an online seller must include on its Web site either the full text of all written warranties or a general statement that they can be obtained free upon written request and an address where the warranty can be acquired. The warranty information must be near the product description, or be located clearly and conspicuously in a separate information section on the Web site. It is insufficient for sites to summarize simply the terms of a manufacturer's warranty.

Sixteen sites received letters advising them of their obligation to tell consumers if their gemstone jewelry may have been treated or enhanced and require special care to retain its appearance, as required by the Jewelry Guides. Finally, five sites selling apparel were advised to make FTC-required country-of-origin disclosures.

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