The staff of the Federal Trade Commission's Division of Enforcement and the Western and Northwestern Regional Offices announced that they conducted a "surf" of more than 200 Internet retailer 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." These sites assured consumers that in-stock items usually ship within 24 to 48 hours after an order is placed - a powerful message to consumers rushing to fill their holiday shopping list. These shipment claims are governed by the Mail or Telephone Order Merchandise Rule, which applies to merchandise ordered over the Internet as well as by telephone, fax, or mail. The Rule spells out the ground rules for making promises about shipment time periods, notifying consumers about unexpected delays, and refunding consumers' money.
Staff is sending letters to over 100 e-tailers to help them understand their obligations under the Rule, based upon a review of the shipment claims on their Internet Web sites. Staff's letter states, "As we enter the holiday shopping season, we want to be sure you are aware of and comply with applicable federal regulations." Here are some of the tips staff provided e-tailers:
- Base shipment claims on facts, not hopes. The Rule requires that you have a reasonable basis for stating that a product can be shipped within a certain time.
- Shipment representations in ads or websites can be revised before you accept an order. The Rule permits you to notify consumers at any time before they complete their order that shipment may take longer than the originally advertised time provided you have a reasonable basis for that new shipment time.
- If you unexpectedly can't ship within the promised time, you 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 you notify your customers you must explain that they have a right to cancel the transaction and get a full and prompt refund and you must provide a revised shipment date.
- Your obligation to ship begins when you 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 doesn't matter whether or not you actually process the payment at the time of the order.
Last holiday season, many Internet sellers aggressively competed by making very quick shipment claims, from overnight to 48 or 72 hours. Unfortunately, some sellers were unable to meet those shipment claims, resulting in disappointed customers. In fact, the Commission 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 these 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 over $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 Office of Consumer and Business Education has two new Consumer Alerts regarding holiday shopping. Holiday Shopping: Is a Sale Price Your Best Deal? offers practical advice about how to get the most for your money. Holiday Shopping? Free Tips from the FTC offers basic shopping tips and advice for shopping by phone, mail and online. Each of these Alerts and additional information about safe shopping is available free from the Commission's Consumer Response Center (1-877-FTC-HELP (1-877-382-4357) and online at www.ftc.gov/ftc/consumer.htm. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
FTC Office of Public Affairs
Bureau of Consumer Protection