| Comment Number: | 532289-00001 |
| Received: | 10/31/2007 8:47:08 PM |
| Organization: | |
| Commenter: | Nwokeji |
| State: | NJ |
| Agency: | Federal Trade Commission |
| Rule: | Mail or Telephone Order Merchandise Rule |
| No Attachments |
Comments:
RE: 16 CFR Part 435 Comment - Mail or Telephone Order Merchandise Rule, Project No. P924214 Dear Sir/Madam: I am writing to comment on the notice of proposed rulemaking regarding the overall costs, benefits, and regulatory impact of the Mail or Telephone Order Merchandise Rule (“MTOR” or “the Rule”) and the possible changes to the Rule to bring it into conformity with changed market conditions. HISTORICAL BACKGROUND. The Federal Trade Commission (“FTC”) promulgated the Mail Order Rule in 1971 and the rule took effect on February 2, 1976, under 15 U.S.C. 57a. § 18. The Mail Order Rule was renamed the Mail or Telephone Order Merchandise Rule on September 21, 1993. MTOR was promulgated to address consumer complaints about sellers’ failures to ship orders on time, failure to ship at all, or failure to provide prompt refunds for unshipped goods or returned goods. MTOR was subsequently amended to reflect orders placed by telephone, telefax, or by computer through the use of a modem. MTOR applies to most goods ordered by mail, telephone, fax, and Internet. It provides that a merchant must specify when goods will be shipped, obtain the customer’s consent to a delay in shipment, and provide prompt refund for cancelled orders or returned goods etc. A Continued Need for MTOR, and Benefits of the Rule: Mail-order offers convenience and easy access to merchandise. Senior citizens, disabled persons, workaholics, stay-home-moms, and the reclusive indulge in this favored necessity. The common denominators amongst internet shoppers are easy, fast, affordable, tax-free, varied, and convenient shopping without the hassle of traffic and long queues at the cashiers. The above denominators include the added benefits of prompt refunds of cancelled or returned orders and ascertainable shipment dates: all of these advantages are provided without stepping into the grocery stores or the malls. Consumers need MTOR. If MTOR ceases to exist, purchasers of merchandise will be deprived of these advantages. Also, merchants are shy of civil penalties that the FTC may impose for violations of MTOR. Companies have been fined hefty amounts for non-compliance with the Rule. The MTOR safeguards the rights of defrauded, unwary, or disappointed customers. It serves as a cautionary restraint against the overzealous merchants. Effects/Costs of Amending Rule to include all Computer and Internet Order: The Rule covers “merchandise orders by telephone, including by telefax or by computer through the use of a modem … .” 15 U.S.C. §57a. Amending the Rule to include computer and internet orders is not substantive and may not incur additional expenses. Consumers and merchants are accustomed to internet orders whether through the use of cable modem, or via wireless connections. Under the current Rule, Mail or Telephone Order Sales “means sales in which the buyer has ordered merchandise from the seller by mail or telephone, regardless of the method … used to solicit the order.” “Telephone” refers to “any direct or indirect use of the telephone to order merchandise, regardless of whether the telephone is activated by, or the language used is that of human beings, machines, or both.” The amended Rule would read, Mail, Telephone, Non-Visual Order Sales means orders by mail, telephone, computer, internet, or through analog, integrated services digital network (ISDN), broadband ISDN, DSL, ADSL, symmetric digital subscriber lin (SDSL), very high DSL (VDSL), cable, wireless internet connections, T-1 lines, bonded T-1, T-3 lines, internet over satellite (loS) or any other method of placing orders through non-visual means. Costs or Benefits of Amending Payment Methods: Apart from payment of merchandise by cash, check, money order, or credit card, the Rule may be amended to include payment by debit card, Western Union, MoneyGram, Paypal, gift card, or other universally accepted method of payment. These options may not incur additional expense to the consumer because they are not obligatory. However, for the merchant, it is a different story. The merchant may have to set up additional facilities to accommodate consumers that choose to exercise newer options. A merchant who accepts Visa may not accept Discover Card or American Express. The consumer should curtail her orders to match options offered by merchants. The language of the Rule would be optional and broad; that way, merchants and consumers have room to maneuver without violating the Rule. The text of the Rule would read “receipt of a properly completed order … shall mean … payment … in form of cash, check, money order, authorization … to charge an existing charge account [debit card, Western Union, MoneyGram, postal order, banker’s check, Paypal, gift card, or other universally accepted method of payment] … .” Creating an expanded list with open-ended options may be preferable; that way, consumers and merchants are not trapped in a morass of administrative rigidity. Refunds should be made in the manner in which payments were received with the exception of Western Union, MoneyGram, escrow, Paypal, gift card, or other universally accepted method of payment. Regarding Western Union, MoneyGram, paypal, gift card, or other universally accepted method of payment, merchants may refund customers by check or if the merchant is likely to incur burdensome expense, the next best option may be considered. The Rule is for consumers’ protection. However, the FTC needs to balance the interests of the public against that of merchants and not create needless burdens on merchants. If the costs of implementing the Rule are burdensome, the purpose of the rule —consumers’ protection — will be frustrated and consumers will bear the brunt of it through increases in sales prices and lack of availability of merchandise. Making Refunds Using Means Other Than First Class Mail: The Rule provides that refunds should be sent to the buyer by first class mail within one (1) billing cycle or seven (7) working days depending on the circumstances of each case. Generally, first class mail is fast and secure. This may explain the rationale behind the first class mail refund rule. As society evolves and technology changes, the law should accommodate these changes and align itself to some of them. Other efficient and faster methods have evolved. Merchants would be given additional options, but the Rule should have minimum requirement. Hence, the Rule may be amended to include electronic transfers, or other means of transferring money as listed above. An appropriate option would be for the Rule to list different methods of refund and give merchants the opportunity to choose which is most beneficial in terms of cost, speed and the nature of each merchant’s business. Also, e-mail notification of charge reversal or refunds may be included in the text of the Rule. Possible Renumbering: “[L]egal language has multiple meanings … [so] legal terms are often defined within a particular context, to avoid mistakes and misunderstandings.” If the Federal Trade Commission decides to amend the Rule in certain respects, it may as well re-order the provisions. Most legal documents start with the definition section. The definition section gives the reader a background to work with when reading the Rule. This serves to reduce intermittent interruptions stop to check the meaning of terminology. Conflict with other federal, state, or local laws or regulations: A draughtsman cannot envisage all scenarios in which a rule or law may operate. There are however some general guidelines. The relevant guideline would be the Supremacy Clause as provided by the United States Constitution. ….. It preempts state laws and regulations. The Mail or Telephone Order Rule is a creation of Congress. 15 U.S.C. 41-58. State laws that are inconsistent with the Rule are invalid except where the Rule regulated a state matter. If, however, the Rule is in conflict with another federal law, again, it is the province of the Court to declare which law will govern the particular situation. Amend the title of the Rule to reflect changes: It would seem appropriate to amend the title of the Rule to reflect the proposed changes. This will serve to emphasize the changes, as well as give the reader a summary of the Rule. I suggest the title, Mail, Telephone, or Non-Visual Order Merchandise Rule (MTNOR). I appreciate the opportunity to comment on the MTOR. If you have questions regarding these comments, please feel free to contact me. Thank you. Very truly yours, Oriyomi Nwokeji, Esq.