In preparation for the holiday shopping season, the U.S. Federal Trade Commission (FTC) recently announced that it had examined 110 internet retail websites, resulting in 72 letters to assist the e-tailers in complying with certain FTC rules, including the Mail Order Rule, the Warranty Rule, Jewelry Guides and rules governing country-of-origin disclosures.
The FTC targeted 52 e-tailing websites that make "quick-ship claims," promising customers that in-stock items usually ship within 24 to 48 hours after the order is placed. Online shipping claims are governed by the FTC’s "Mail Order Rule," which requires e-tailers to ship items to the customer within the time stated or, if no time is listed, within 30 days. If the e-tailer is unable to ship within that time, the merchant must notify the buyer of the delay and provide a revised shipping date. Websites that promise to ship the order within 48 hours but cannot do so must notify the customer within that period and give them the option to cancel the order.
The FTC also identified 52 websites that sell warranted products that did not comply with the FTC’s "Warranty Rule." This rule requires that written warranties on consumer products costing more than $15 be made available to consumers before they purchase the product. It also requires online sellers to include on the website either the full text of the warranty or a general statement that the consumer may obtain the full text of the warranty by sending a written request to a listed address. The warranty information also must be placed near the product description or be located clearly and conspicuously in a separate information section on the website. Providing a general summary of the warranty terms on the website is insufficient.
In addition, the FTC informed 16 sites that sell jewelry of their obligations to disclose to consumers if their gemstone jewelry may have been treated or enhanced and require special care to retain its appearance. Five sites selling apparel also were advised to include country-of-origin disclosures as mandated by the commission.
Online retailers who fail to comply with FTC requirements may face a civil enforcement action and monetary penalties for noncompliance. During the 1999 holiday season, the FTC brought civil penalty actions against seven e-tailers for allegedly violating the Mail Order Rule, resulting in over $1.5 million in total penalties.