The Mail or Telephone Order Merchandise Rule (the Rule) lays out detailed and specific regulations governing the delivery of products ordered by telephone, fax, or the Internet. It regulates promises about shipments, refunds, and notifications about unexpected delays in the delivery of orders. The Rule is enforced by the Federal Trade Commission (FTC).
The Rule is also known as the 30-day rule. It requires merchants shipping a product to a buyer to make the shipment within a reasonable period. The merchant can specify a time within which delivery will be made. If the merchant does not specify a period, it is automatically 30 days.
If the merchant cannot ship within 30 days or within the promised period, the merchant must get the customer’s consent to the delay. If no consent is obtained or the customer does not consent to the delay, the merchant is required to refund the customer’s money promptly for the unshipped merchandise.
How Do I Comply with the Rule?
There are certain things a merchant must do to comply with the Rule:
- If the merchant states that their product can be shipped within a certain period, they must have a reasonable basis for making the promise. A merchant wants to avoid any fraudulent misrepresentations;
- If the merchant does not clearly state what the shipment period is, there must be a reasonable basis for believing that the merchant can ship the product within 30 days;
- If it is not possible for the merchant to ship within these periods, they must notify the consumer of the delay. They must also give the consumer a revised shipment date and also inform him of their right to cancel and get a refund;
- If a merchant knows how long the delay will be, up to 30 days, it can treat the consumer’s silence as agreement to the delay;
- However, if the delay is to be longer or indefinite, the merchant must get the consumer’s consent to the delay. Otherwise, they must refund the consumer’s money;
- A merchant also has the right to cancel orders that cannot be filled, but it has to notify the customer and give them a refund.
What If I Have Unexpected Demand?
If a merchant has experienced a delay with its shipments or is overwhelmed with the number of orders it has to process, there is some flexibility in the Rule as follows:
- If the merchant reasonably believes it can ship the product by a new date, it can change its shipment promises until the customer places the order. It should also notify the customer;
- If the merchant cannot ship in the time originally promised, the merchant must provide a delay option notice by email, fax, or telephone.
Sales by mail, Internet, or telephone refers to sales in which the consumer orders merchandise from the merchant via the U.S. Postal Service (USPS), the Internet, or by telephone. How payment is made is not relevant. The method used to solicit the order is also irrelevant to the Rule’s application.
To make a refund promptly, as required by the Rule, the merchant may send it by any means at least as fast and reliably as first-class mail. This must happen within 7 business days of the date the consumer’s right to the refund arose under the Rule.
If the merchant is not able to provide a refund by the same method by which the consumer made its payment, then the merchant can refund the payment in the form of cash, check, or money order, again by any means at least as fast and reliable as first class mail, within 7 business days of the date on which the seller discovers it cannot provide a refund by the same method as payment was made by the consumer.
A refund that is made under paragraph (d)(2)(i) of the Rule may be sent by any means at least as fast and reliable as USPS first class mail within 1 billing cycle of the date on which the consumer’s right to refund arose pursuant to the provisions of that part of the Rule.
Receipt of a properly completed order means that the consumer has submitted full or partial payment in the property amount as cash, check, money order, authorization from the buyer to charge their credit card, or other payment methods. Receipt of a properly completed order on the merchant’s part means it has received both the payment and an order from the consumer, with all the information the merchant needs to process and ship the order.
However, here the merchant receives notice that a payment by means other than cash or credit as submitted by the consumer has been dishonored or that the consumer does not qualify for a credit transaction; receipt of a properly completed order means the time at which one of the following happens:
- The merchant receives notice that a payment by means other than cash or credit in the proper amount tendered by the consumer has been completed;
- The consumer submits cash in the right amount; or
- The merchant is notified that the consumer qualifies for a credit sale.
How Can I Make a Refund?
Under the Rule, a refund is any of the following:
- Where the consumer submits payment in full for the unshipped merchandise in the form of cash, check, or money order, a return of the amount submitted in payment in the form of cash, check, or money order is sent to the consumer;
- Where there is a credit sale, and the merchant is a creditor, a copy of a credit memorandum or the like or an account statement is sent to the consumer;
- Where there is a credit sale, the merchant can send the consumer an account statement showing that no remaining charge has been incurred, or the merchant can take action to remove the charge from the consumer’s account and notify the consumer of the action;
- If the consumer made a partial payment for the unshipped merchandise in the form of cash, check, or money order, the merchant might return the amount submitted in the form of cash, check, or money order sent to the merchant;
- Where the consumer tendered payment for the unshipped merchandise by any means other than those enumerated in paragraph (d)(1) or (2) of this section;
- Instructions sent to the entity that transferred payment to the merchant instructing that entity to return to the consumer the amount submitted in the form submitted and a statement sent to the consumer setting forth the instructions sent to the entity, including the date of the instructions and the amount to be returned to the consumer; or
- A return of the amount submitted by the consumer in the form of cash, check, or money order sent to the merchant; or
- A statement from the merchant sent to the consumer acknowledging the cancellation of the order and representing that the merchant has not taken any action regarding the order, which would give it access to any of the consumer’s funds.
Shipment occurs when the merchandise is physically delivered into the possession of the delivery carrier.
Why Should I Comply with the Rule?
The FTC can sue merchants who violate the Rule for injunctive relief, civil monetary penalties of up to $46,517 per violation for a violation that has taken place within the five years preceding the FTC complaint, and consumer redress. When the USPS is involved, the USPS also has the legal authority to take action for such problems as non-delivery. State law enforcement agencies might also take action for violating state consumer protection laws.
Do I Need a Lawyer Experienced with the Rule?
The details can be complicated. If you run a retail business that takes orders via the mail, the Internet, or telephone, a consumer lawyer can explain your rights and obligations under the Rule and how to comply with it. As a consumer, a consumer protection attorney would be able to discuss your rights under the Rule, what, if anything, a company can change about its shipment promises and how it must make refunds if shipment cannot be completed.