The FTC: It sees you when you’re shipping--or making promises

The word to online retailers from the Federal Trade Commission this holiday shopping season: Better watch out.

The FTC’s Division of Enforcement recently sent letters to 51 online retailers reminding them that certain claims they make on their web sites are covered by FTC regulations. "We want to make certain that you know that online sales are governed by many of the FTC-enforced statutes and regulations that apply to other forms of marketing and advertising," the FTC said in its letter.

The letter, which is the result of an annual review of retailing sites by the FTC, came after the FTC determined that some of the 63 Internet retailing sites it reviewed recently were in violation of FTC regulations governing warranties and rebates. The FTC also wanted to remind retailers making quick ship claims that they must ship within the specified time or inform the customer within the specified time that shipping has been delayed and give the customer the option to cancel. A number of high profile online retailers paid more than $1.5 million in penalties after violating FTC guidelines governing promises of shipping times during the 1999 holiday shopping season.

Gonzalo Mon, an attorney with the Washington, D.C., firm of Collier, Shannon, Scott, says the FTC appears to have stepped up its enforcement of the Mail or Telephone Order Rule this year. Although the rule does not require retailers to keep records, he says retailers should have some evidence to present to FTC investigators as to why they determined they could meet the promises they make on web sites.

Retailers are in violation of the law mostly because of mistakes, he says. "Ignorance of the law is part of it," he says, "but the biggest part is honest mistakes. Companies have mechanisms to comply with the rules, but things happen. There may be problems with a vendor. Or when you`re dealing with a huge promotion, it`s easy to let things slide."

In any event, he says, "Make sure you have a reasonable basis for your promises and that you can back it up."

The FTC staff found that 42 of the 63 sites made quick-ship claims. The FTC’s Mail or Telephone Order Rule requires that sellers ship orders to buyers within the time stated in the ad, or, if no time is stated, within 30 days after receiving the order.

The FTC review also found that 14 of 23 sites selling warranted products failed to provide adequate information about the warranties. The FTC’s Pre-Sale Availability Rule requires that written warranties on consumer products costing more than $15 be made available to consumers before they buy, and specifies what retailers must do to accomplish this. The FTC staff sent letters to these sites advising them to include on their web sites either the full text of written warranties or a general statement that warranties could be obtained free upon request and an address where the warranty can be acquired. The letters also advised how links can be used to provide warranty information. Warranty information must be placed near the product description, or be located clearly and conspicuously in a separate information section on the web site. It is not sufficient for sites to summarize simply the terms of a manufacturer’s warranty, the FTC says.

The FTC staff also advised two sites selling apparel to make FTC-required country-of-origin disclosures. The FTC’s Rules and Regulations Under the Textile Fiber Products Identification Act require that most textile products sold to consumers through print or online catalogs have an origin disclosure in the product information as to whether each item was made in USA, imported or both.

Finally, the FTC sent letters to 19 sites making rebate claims advising them on how the commission has constructed truth-in-advertising principles for rebate offers and redemption practices.

The FTC advised retailers offering rebates that they should disclose the type of rebate offered, for instance, in-store or mail-in; the terms of the offer; and the total price consumers must pay at the time of purchase to receive the rebate. Also, the letters advised that these disclosures should be clear and prominent and appear in close proximity to the rebate offer. The letter also advised the companies that the rebates should be sent out within the time promised or within 30 days if no time-frame is mentioned.

"As consumers turn to the Internet to shop for holiday purchases, we want to be sure that they get what they expect, when they expect it," said Howard Beales, director of the FTC’s Bureau of Consumer Protection.

The FTC did not identify the sites it reviewed or who received the letters.