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Internet Sales: FTC's Mail or Telephone Order Merchandise Rule

telephone order merchandise ruleWith the holiday shopping season gearing up, let's take a look at a common scenario.  Frank, a "last minute" shopper, purchases a great gift from an Internet merchant's website.  The Internet merchant states that the item will be delivered to Frank in 3-5 business days.  Unfortunately for Frank, the item is delivered 5 days late. Does Frank have rights under the law?  Is the Internet merchant required to notify Frank of the late delivery? Read on.

The FTC recently proposed amendments to its Mail or Telephone Order Merchandise Rule (the "FTC Rule"). The amendments, which are largely a result of evolving technologies and the explosive growth in Internet sales, clarify that the FTC Rule is applicable to all Internet merchandise sales.   

Under the FTC Rule, Internet merchants must have a "reasonable basis" for stating that an item can be shipped within a certain period of time.  A "reasonable basis" means that the Internet merchant has information, at the time of sale, that would indicate that the time frame is an accurate representation of when the item will be delivered.  If an Internet merchant does not provide a time frame for delivery, the merchant must have a "reasonable basis" for believing that the product will ship within 30 days. In sum, the FTC Rule was developed to require merchants to state the time frame for delivery, or deliver the order within 30-days.

If a merchant is unable to meet the quoted delivery date, the merchant must notify the customer before the originally promised shipment date passes (or, if no time was specified, before the expiration of 30 days) and give the customer the option of either consenting to the delay or canceling the order and receiving a full refund.

So, in Frank's case, the Internet merchant is required to notify Frank of the late delivery.  If Frank is not okay with a delayed delivery, he has the right to demand a refund.

If you have questions regarding the Mail or Telephone Order Merchandise Rule, please contact me.

Categories: E-Commerce

Photo of Nicholas M. Oertel
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focuses his practice in the areas of Michigan non-property tax disputes, business entity selection, corporate transactions, and information technology.

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