On-line retailers will be fined as much as $10,000 by the Federal Trade Commission for violating the agency’s rules on shipping merchandise to consumers this holiday season.
With more than 10 million shoppers expected to purchase on line during the holidays, some retailers unable to fulfill the flood of orders and meet shipping demands may find themselves violating that law.
“We are aware of people complaining,” said FTC spokeswoman Victoria Streitfeld.
The FTC’s Mail or Telephone Order Merchandise Rule, instituted in 1975, spells out the ground rules for making promises about shipments, notifying consumers about unexpected delays and refunding consumers’ money.
According to the law, a company must ship an order within the time stated in its ads or within 30 days after the order was placed if no shipment date is promised.
If an e-tailer is unable to fulfill the order, the company must notify the consumer, giving him the option of agreeing to the delay or canceling the order for a refund.
But a notice about a gift unable to arrive for Christmas while frustrating does not mean the merchant is violating the law.
When Toys ‘R’ Us realized it was unable to ship some orders within the time promised, the Paramus, N.J.-based toy company contacted consumers by e-mail this week offering them the option to cancel their orders or receive $100 vouchers, according to Bloomberg News.
But the toy giant is not the only retailer overwhelmed by on-line holiday shoppers, who are expected to spend more than $6 billion this holiday season.
Analysts won’t know how on-line retailers fared this season until early January, after retailers have assessed the holiday rush. The FTC has not determined how many complaints it has received from disgruntled shoppers.
The agency’s Consumer Response Center, however, is not the only agency that may get bogged down with on-line complaints after the season ends today. Shoppers will turn to their local Better Business Bureau and the Direct Marketing Association, a trade organization representing businesses that advertise directly to consumers, including on-line merchants and catalog retailers.
The Council of Better Business Bureaus Inc. and the DMA so far have not received any consumer complaints. But that is likely to change after the holiday season ends.
“Frankly, we have not had time yet to receive any complaints directly related to the holiday season,” said Amy Blankenship, director of the DMA’s Shop-at-Home Information Center.
If consumers are having trouble with e-tailers, they are probably spending the time trying to resolve the situation on their own before getting a third party involved, she said.
The DMA’s ConsumerLine helps consumers who have had difficulty with mail-order, Internet or telephone purchases. The group requires a written complaint accompanied with as much supporting evidence as possible, like phone records or invoices. ConsumerLine staff will resolve the matter with the company.
The FTC, however, does not resolve individual problems for consumers, but it can go after a company if it sees a pattern of violations.
Companies that do violate the Mail or Telephone Merchandise Rule can be sued by the FTC for injunctive relief and civil penalties of up to $10,000 per violation, according to the measure.
Merchants do have some leverage if they are overwhelmed by unexpected demands.
They can change their shipment promises until the consumer places the order, if they reasonably believe that they can ship by the new date. They must tell the customer the new date before the order is placed.
On-line merchants also must provide a “delay option notice” if they are not able to ship within the originally promised time. Businesses can notify customers through e-mail, fax or phone.
The FTC warns merchants that their failure to ship on time or notify customers about delays may discourage repeat purchases.
Ms. Blankenship said companies that have been in business for years and can meet the holiday demand won’t have trouble drawing customers back.
“For companies that are new to the Internet, it’s a learning curve,” she said. “They can spend a lot of money to market themselves, but if they can’t deliver, [shoppers] are not coming back next year.”