In this installment of PARCEL Counsel, we will look at a Federal Trade Commission (FTC) regulation. Its title is “Mail, Internet, or Telephone Order Merchandise.” Its nickname is “the 30-day Rule.”
The gist of this regulation is that when a seller of merchandise takes an order by mail, over the internet, or by telephone, the seller must ship the merchandise within the time period stated in its advertising or otherwise conveyed to the buyer. If no specific time period is stated, then the seller must ship the merchandise within 30 days.
It should be noted that if your company is such a seller, it is very important that you know this regulation and be in compliance. If not, there can be very severe consequences. The FTC could seek civil penalties in excess of $40,000 per violation. The United States Postal Service also has authority to take action for non-delivery. Further, this federal rule does not preempt the ability of individual states to also enforce their own consumer protection laws.
The second component of the regulation is that if the seller cannot ship the merchandise within the stated time period or the 30-day default period, then the seller must promptly refund the price of the merchandise without the buyer having to request the refund.
The regulation is focused on when the merchandise is shipped, not when the merchandise is received by the buyer. The regulation states “Shipment shall mean the act by which the merchandise is physically placed in the possession of the carrier.”
If a seller is shipping merchandise from its own facility, it is fairly easy to know when the merchandise has been shipped. However, in this era of e-commerce, it is a very common practice for the merchandise to be given to the carrier for delivery by a fulfillment service or by a third-party vendor.
In such a situation, what happens if the seller promptly notified the fulfillment service or third-party vendor with all of the necessary instructions for shipping… and then the fulfillment service or third-party vendor not only does not ship the merchandise within the required time period… but also does not tell the seller that the merchandise has not been timely shipped?
The short answer is that the seller has the ultimate responsibility for following the regulation. By not making the refund, even though the seller did not know that a refund was due, the seller is in violation of the regulation. Accordingly, parcel shippers who are subject to this regulation must have in place a strategy to monitor the third parties with whom it has made arrangements to do the actual shipping.
“Refund” is defined by the regulation as meaning “where the buyer tendered full payment for the unshipped merchandise in the form of cash, check, or money order, a return of the amount tendered in the form of cash, check, or money order sent to the buyer.”
“Prompt refund” is defined by the regulation as meaning “by any means at least as fast and reliable as first class mail within seven (7) working days of the date on which the buyer’s right to refund vests.”
The regulation acknowledges the fact that situations can arise where shipment of the merchandise is delayed. Accordingly, the regulation allows a seller to notify the buyer that there will be a delay and to give the buyer the choice to either cancel the order or to consent to the delay. It is important to note that the notice of delay must be given within the time period required for the merchandise to be shipped... not afterwards.
For PARCEL readers interested in learning more about this topic, the FTC has published a “BUSINESS GUIDE TO THE FTC'S MAIL, INTERNET, OR TELEPHONE ORDER MERCHANDISE RULE” at https://www.ftc.gov/tips-advice/business-center/guidance/business-guide-ftcs-mail-internet-or-telephone-order. In addition to a plain English explanation, the guide also includes sample wording for notices to be given by the seller to the buyer. All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Your questions are welcome at firstname.lastname@example.org.
This article originally appeared in the November/December, 2021 issue of PARCEL.