Two-year-old MTailor has garnered millions in sales for its custom-made shirts, all via its app.
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Despite your best efforts to promptly fulfill orders, there may be instance in which you are unable to ship on time. As soon as you learn that there will be a delay, you must promptly notify all customers who will be affected.
Although the FTC does not require retailers to keep records pertaining to the Mail Order Rule, it certainly makes sense to do so. In fact, the Rule provides that in an investigation by the FTC, a retailer’s failure to keep records that demonstrate compliance will create a “rebuttable presumption” of a violation, that is, the FTC will presume that a retailer is guilty of a breach of the rule, but the retailer can present evidence to the contrary. As a result, many retailers commission legal audits to make sure that their records reflect the information the FTC will look for in an investigation. Your records should reflect, among other things:
- How you anticipate the demand for each product. Past demand for similar products or offers can often serve as a good guide.
- How you monitor inventory. If inventory begins to fall short, consider ordering more products or modifying your shipping representations.
- How your fulfillment system is designed to comply with the Rule. You should have a mechanism to ensure that delay notices and refunds are mailed promptly.
You should also keep copies of the notices your company sends to customers so that you can demonstrate the notices contained the information required by the Rule. Because the statute of limitations for the FTC to enforce the Rule is five years for civil penalties, it is prudent to keep your records for at least that amount of time.
Other rules apply
Complying with FTC regulations is a good first step when structuring or advertising any promotion. It shouldn’t be the only step, though. You should be aware that many states have statutes that may restrict your promotion. For example, states such as California, Connecticut, and New York regulate the information that needs to be included in advertisements for rebates. It is important to consult all applicable laws before you advertise a promotion on your web site.
Gonzalo E. Mon is an attorney in the Advertising and Marketing and Intellectual Property practice groups at Collier Shannon Scott PLLC in Washington, DC. You can reach him at GMon@colliershannon.com.