Federal Trade Commission

Press Release – April 29, 2013

ORIGINAL RULE ISSUED IN 1975:

  • The crux of the original Mail or Telephone Order Merchandise Rule (the “Rule”) requires sellers who solicit buyers to order merchandise via the mail or by phone to have a reasonable basis to expect that they are able to ship the product within the advertised time frame, or if no time is specified, then within 30 days.
  • If a seller is not able to ship within the promised time frame, it is required to obtain the buyer’s consent to a delay in shipping or refund the amount paid for the merchandise that has not yet shipped.

DEVELOPMENTS IN 2007:

  • The Federal Trade Commission (“FTC” or the “Commission”) recognized the need to amend the Rule to address obvious changes in technology and commercial practices that have occurred over the years.
  • Based on the received comments, the FTC has proposed amendments that would:
  1. Clarify that the Rule covers orders placed over the Internet;
  2. Revise the Rule to allow sellers to provide refunds and refund notices to buyers by any means that are at least as fast and reliable as first-class mail;
  3. Clarify sellers’ obligations when buyers use payment methods not spelled out in the Rule, such as debit cards or prepaid gift cards; and
  4. Require that refunds be made within seven (7) working days for purchases that were made using third-party credit, such as Visa or American Express cards. For credit sales where the seller is the creditor (such as merchants using their own store charge cards), the refund deadline would remain one (1) billing cycle

APRIL 2013:

  • The FTC recently issued a Staff Report on further proposed amendments to the Rule and is seeking public comments before implementing any changes.
  • Commission Staff is making the following Rule change recommendations:
  1. Clarify that the Rule covers all Internet merchandise orders, regardless of the method consumers use to access the Internet;
  2. Permit refunds and refund notices by any means that are at least as fast and reliable as first class mail;
  3. Clarify sellers’ refund obligations for orders using payment methods not specifically enumerated in the Rule; and
  4. Require sellers to process any third-party credit card refunds within seven (7) working days of the vesting of the buyer’s right to a refund.

TAKE AWAY:

  • The FTC has indicated that it is systematically reviewing all of its rules and guides.
  • When the new Rule is released, we will report on the final changes and any potential impact on your business practices.