What you Must Know Before you Make a Shipment Representation under the Mail, Internet, or Telephone Order Rule.
When you offer to sell merchandise, you must have a "reasonable basis" for:
-
any express or implied shipment representation, or
-
believing you can ship within 30 days of receipt of an order -- if you make no shipment representation or if the shipment representation is not clear and conspicuous.
Whenever you change the shipment date by providing a delay notice, you must have a "reasonable basis" for:
-
the new shipment date, or
-
any representation that you do not know when you can ship the merchandise.
When you take orders by telephone, or the Internet, you may choose to provide prospective customers with updated shipment information. This may differ from what you said or implied about the shipment time in your advertising. The updated shipment information you provide on the telephone or the Internet supersedes any shipment representation you made in the advertising. You also must have a reasonable basis for the updated shipment representation.
"Reasonable basis" means that the merchant has, at the time of making the representation, such information as would under the circumstances satisfy a reasonable and prudent businessperson, acting in good faith, that the representation is true.
The evidence you need to demonstrate the reasonableness of your shipment representations varies with circumstances. The following, however, is important:
-
Anticipated demand. Is the demand for each advertised item reasonably anticipated?
-
Supply. For each advertised item, is there a sufficient inventory on hand or adequate sources of supply to meet the anticipated demand for the product?
-
Fulfillment system. For all promotions in the relevant sales seasons, can the fulfillment system handle the cumulative anticipated demand for all products?
-
Recordkeeping. Are adequate records kept of the key events (see section headed "Why You Should Keep Records" for a list of key events) in each individual transaction to ensure that items can be shipped within the applicable time, as established by the Rule?
Remember: Whether you make a shipment representation or rely on the 30-day rule, your advertising should be unambiguous about when you will ship.
If your customers apply to you to establish an in-house new credit account or increase an existing credit line to pay for the merchandise they order, the Rule provides the following:
-
If you make no shipment representation when you solicit the order, you are allowed 50 (instead of 30) days to ship the order. The extra 20 days is to enable you to process the credit application. If you wish to use this provision of the Rule, you must have a reasonable basis to believe you can ship in 50 days.
-
If you do make a shipment representation when you solicit the order, you must have a reasonable basis for being able to ship in that time, regardless of whether the order is accompanied by an application for credit or extension of a credit line. You are presumed to have factored in the time needed to process the credit application or to have qualified your shipment representation appropriately.
For more information, see here: https://www.ftc.gov/tips-advice/business-center/guidance/business-guide-ftcs-mail-internet-or-telephone-order
These materials were obtained directly from the Federal Government public websites and are posted here for your review and reference only. No Claim to Original U.S. Government Works. This may not be the most recent version. The U.S. Government may have more current information. We make no guarantees or warranties about the accuracy or completeness of this information, or the information linked to. Please check the linked sources directly.