The Federal Trade Commission [FTC] has broad statutory authority to issue regulations designed to prevent unfair or deceptive trade practices. As a Direct Mailer, you should be careful to observe the necessary procedures to avoid violating FTC regulations such as the Mail Order Rule.
This rule became effective February 2, 1976, in response to consumer complaints about mail order businesses that did not ship goods on time. You can comply with the rule simply by shipping the goods within the time stated on your advertisements, or within 30 days of receiving the order if no other date is stated on your advertisements. A shipping date, when provided in your offer, must be clearly and conspicuously stated.
If you are unable to ship merchandise within the allotted time, you are required to send a written notice advising your customers that they have two options:
- they may consent to a delay; or
- they may cancel the order and receive a prompt refund. This notice must be sent before the promised shipping date or, if no date was given in your solicitation, within 30 days after you receive the order. Customers must also be made aware that nonresponse is considered consent to a delay of not more than 30 days.
If you are unable to provide a revised shipping date, your notice must state that you cannot determine when the merchandise will be shipped. It must also state that the order, if not canceled by the customer, will be automatically canceled unless:
- you ship the merchandise within 30 days of the original shipping date; or
- you receive, within 30 days of the original shipping date, your customer's consent to the delay.
If you are unable to ship by the revised shipping date, you must send another notice. This notice must inform your customers that, unless they consent in writing to another delay, the order will be canceled and a refund issued. You do not have to offer this notice to customers who consented to an indefinite delay in response to the first option notice.
All refunds must be sent to the customer by First-Class MailĀ® within seven days after the order is canceled. If payment was made by credit card, you must make refunds within one billing cycle after the order is canceled. Under no circumstances are you to substitute a credit voucher or script for a refund.
The Mail Order Rule does not cover:
- Magazine subscriptions, except for the first shipment
- Sales of seeds and growing plants
- Orders made on a COD basis
- Transactions covered by the FTC's Negative Option Rule (such as book and record clubs)
- Mail order photo-finishing
- Orders made by telephone and charged to a credit card account
The foregoing merely summarizes some key provisions of the Rule. You should contact the FTC for information about the entire Rule and its application, and about other FTC regulations that may be applicable to your particular business.
In addition to statutes and regulations administered by the FTC, you should also be informed about any other federal, state or local regulations that may apply to your business. Legal advice needed to satisfy this responsibility can be obtained from private legal counsel.