Mattel To Pay Penalty for Violating Federal Rule

Mattel, Inc., has agreed to pay $146,186 in civil penalties for failure to make timely deliveries or prompt refunds in the sale of its Barbie collectible dolls. The agreement is part of a settlement resolving Federal Trade Commission charges that the company violated the FTC’s Mail or Telephone Order Merchandise Rule (“the Rule”) when it failed to ship this merchandise or provide delay notices, as required by the Rule. Mattel has agreed to be bound by an injunction against violating the Rule in the future.

Barbie collectible dolls are made of ceramic materials, hand decorated, lavishly coifed and outfitted, and promoted for in-home display or investment. Mattel advertises the dolls nationally by direct mail, Sunday supplements, women’s service and general magazines and doll books, and it takes orders for them by mail and by telephone. Individual dolls cost approximately $80, and multiple dolls sets costs as much as $225.

Mattel, a manufacturer and marketer of children’s toys since 1945, is a publicly held Delaware corporation. Its principal place of business is in El Segundo, California.

The FTC’s Mail or Telephone Order Merchandise Rule was promulgated in 1975 to govern shipping times and refunds for mail order sales. It was expanded in 1994 to cover sales conducted over the telephone, computer or facsimile machine. The rule requires a merchant to ship ordered merchandise within the time stated in its ads. If no time is stated, the merchant must send the merchandise within 30 days after receiving the order. If a merchant is unable to ship the order before the deadline, it must send customers an option notice giving them the choice of agreeing to a delay or canceling their orders and receiving prompt refunds.

According to the FTC’s complaint, beginning in 1994, after having received orders for the dolls by mail or by telephone, Mattel failed to ship the dolls to the buyer within the Rule’s applicable time. The FTC also alleged that Mattel failed to offer its customers an option either to consent to a delay in shipping or to cancel the order and receive a prompt refund.

To settle the agency’s charges, Mattel has agreed to pay a $146,186 civil penalty and to refrain from violating, directly or through any corporation or fulfillment house, any provision of the FTC’s Mail or Telephone Order Merchandise Rule in the future.

The consent decree to settle these charges, which requires the court’s approval to become binding, also contains various reporting provisions designed to assist the FTC in monitoring the company’s compliance.

The FTC has published a free brochure, “Shopping by Phone or Mail,” which describes consumers’ rights under the Mail or Telephone Order Rule and offers tips for resolving problems that may arise when ordering merchandise by phone or mail.

The FTC vote to authorize filing of the complaint and consent decree was 5-0. It was filed in the U.S. District Court for the Central District of California, on Dec. 23, by the Department of Justice at the FTC’s request.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent decrees have the force of law when signed by the judge.

Copies of the brochure, as well as the complaint and consent decree in this case, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580: 202-326-2222; TTY for the hearing impaired 202- 326-2502. To find out the latest news as it happens, call the FTC’s NewsPhone at 202-326- 2710. FTC news releases and other documents also are available on the Internet at the FTC’s World Wide Web Site at http://www.ftc.gov (no period).

(FTC File No. 952-3496)
Civil Action No. CV96-8983ER