The Internet is the fastest growing source of mail order sales. The explosive growth in the goods and services sold online has in the past taken many online sellers by surprise: demand has outpaced supply, depleting inventories and disappointing customers. This can lead to serious problems with the FTC.
The FTC has issues directives spelling out the ground rules for making promises about shipments, notifying consumers about unexpected delays, and refunding consumers’ money. Enforced by the FTC, the Mail or Telephone Order Rule applies to orders placed by phone, fax or the Internet.
Complying With The Rule
By law, you must have a reasonable basis for stating that a product can be shipped within a certain time. If your advertising doesn’t clearly and prominently state the shipment period, you must have a reasonable basis for believing that you can ship within 30 days.
If you can’t ship within the promised time (or within 30 days if you made no promise), you must notify the customer of the delay, provide a revised shipment date and explain their right to cancel and get a full and prompt refund.
For definite delays of up to 30 days, you may treat the customer’s silence as agreeing to the delay. But for longer or indefinite delays – and second and subsequent delays – you must get the customer’s written, electronic or verbal consent to the delay. If the customer doesn’t give you approval, you must promptly refund all the money the customer paid without being asked by the customer.
Finally, you have the right to cancel orders that you can’t fill in a timely manner. Your must, however, promptly notify the customer and make a prompt refund.
Running Late? Overwhelmed with Orders?
The Rule gives you several ways to deal with an unexpected demand.
You can change your shipment promises up to the point the consumer places the order, if you reasonably believe that you can ship by the new date. The updated information overrides previous promises and reduces your need to send delay notices. Be sure to tell your customer the new shipment date before you take the order.
You must provide a delay option notice if you can’t ship within the originally promised time. The Rule lets you use a variety of ways to provide the notice, including e-mail, fax or phone. It’s a good idea to keep a record of what your notice states, when you provide it, and the customer’s response. If the FTC comes calling, the records will act as your saving grace.
If you are selling products online, make sure you have sufficient inventory. The FTC has a history of aggressively fining companies that fail to deliver products. This is particularly true if you fall on your face during the Christmas season.
Richard Chapo is the lead attorney for the law firm
– a firm providing legal advice to California businesses. This article is for general education purposes and does not address every facet of the subject matter. Nothing in this article creates an attorney-client relationship.