FTC Proposes Amendments to Mail or Telephone Order Merchandise Rule to Keep Up With Current Technology and Business Practices

As part of the Federal Trade Commission’s systematic review of all of the agency’s rules and guides, the FTC is seeking public comment on proposed amendments to the Mail or Telephone Order Merchandise Rule.

The Rule, issued in 1975, requires that marketers who solicit buyers to order merchandise through mail or telephone must have a reasonable basis to expect that they can ship ordered merchandise within the time frame they advertise, or, if no time frame is specified, within 30 days. The Rule also requires that, when a seller cannot ship within the promised time, the seller must obtain the buyer’s consent to a delay in shipping or refund payment for the unshipped merchandise. In 2007, the FTC sought public comment on how the Rule could be amended to address changes in technology and commercial practices. Based on a review of comments received, the FTC has concluded that the Rule continues to benefit consumers and will be retained. In addition, the Commission proposes the following amendments to the Rule:

• Clarify that the Rule covers all orders placed over the Internet;
• Revise the Rule to allow sellers to provide refunds and refund notices to buyers by any means at least as fast and reliable as first-class mail;
• Clarify sellers’ obligations when buyers use payment methods not spelled out in the Rule, such as debit cards or prepaid gift cards;
• Require that refunds be made within seven working days for purchases that were made using third-party credit, such as Visa or MasterCard cards. For credit sales where the seller is the creditor (such as merchants using their own store charge cards) the refund deadline would remain one billing cycle.

An FTC publication, A Business Guide to the FTC's Mail or Telephone Order Merchandise Rule, offers information about the Rule and how to comply. The Commission also published a notice announcing some technical amendments to alphabetize the definitions and move them to the beginning of the Rule.

The Commission vote approving the Final Agency Action Notice and Notice of Proposed Rulemaking was 5-0. They are available on the FTC’s website and as a link to this press release and will be published in the Federal Register soon. Instructions for filing comments appear in the Federal Register Notice. Comments must be received by December 14, 2011. All comments received will be posted at www.ftc.gov/os/publiccomments.shtm. (FTC File No. P924214; the staff contact is Jock K. Chung, Bureau of Consumer Protection, 202-326-2984)

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