Staples recently had to pay $850,000 to settle an FTC Mail or Telephone Order Merchandise Rule complaint. Why? Because the company failed to keep its product delivery promises. Specifically, Staples claimed on its Web site that it could de-liver products in just one day-when, in fact, the offer applied only to customers living within 20 miles of a Staples retail store, and it applied only Monday through Friday.
Is your Web site misleading your customers? Even if it's unintentional, doing so could land your business in hot water. "Delivery or shipping promises have to be based on fact, not hope," says Laura Fremont, an attorney with the FTCWestern Region office in San Francisco. "If you are going to say 'We'll get this to you in one day or 10 weeks,' you have to have a pretty good reason to believe you can achieve that."
So if you haven't already, now's a good time to familiarize yourself with the FTC rule, especially now that the holidays are just around the corner. Chances are you're ramping up for an increase in sales-and deliveries-and the last thing you need is to end up on the FTC's radar. "One of the biggest ways we find out about companies violating the rule is from consumers calling the FTC and complaining about late orders-especially when they are not told that something would be late," Fremont says. "And we get complaints about small companies as well. If you are a small business, it doesn't mean you won't hear from us."
A Question of Compliance
The FTC adopted the Mail or Telephone Order Merchandise Rule in 1975 to govern mail order sales, spelling out the ground rules for making promises about shipments and notifying consumers about unexpected delays. Often called the "30-day rule," it requires a company to have a reasonable basis for stating or implying that it can ship within a certain time when it advertises merchandise. If a company doesn't make a shipment statement, it must be able to ship goods within 30 days. If the company can't ship within the time stated or within 30 days, it must notify customers that they can agree to a delay or cancel their order and receive a refund. The rule applies to merchandise ordered via the Internet and by phone, fax or mail. For more, read the FTC's business guide to the rule, which was published in cooperation with the Direct Marketing Association, at www.ftc.gov/bcp/conline/pubs/buspubs/mailorder.htm.
According to experts, there are many reasons why some e-tailers have yet to comply. Fremont, for instance, says there has been pressure in the last few years for Internet merchants to offer overnight delivery if competitors are doing it: "But if you can't do it, you shouldn't be promising it. And it's not just that it's against the law, it's just bad business."
Another problem is that some busi-nesses set inaccurate holiday projections, leading to delays-and causing them to break their delivery promises. But generally, complying with the rule isn't difficult. If you keep track of orders and evaluate when they're delivered throughout the year, you'll learn how to make accurate delivery promises.
Keeping Promises
One company that's careful about its delivery claims is Delightful Deliveries Inc.in Syosset, New York. The company's virtual gourmet store offers food gifts, gift baskets and desserts. Orders are sent to the company's partners-such as Mrs. Fields Original Cookies and Omaha Steaks-which then ship deliveries directly to customers. Currently, the company has 25 partners and sells 1,000 products. Sales are projected to reach $3 million to $4 million this year.
The Web site lets customers choose an arrival date for a product based on specific cut-off times, says Eric Lituchy, CEO and co-founder. In addition, every vendor "has to give us a set time that they will take an order and guarantee [when] it will ship out, so we can put that on our site and tell our customers accurate information," Lituchy says.
One problem spotted early on has since been fixed. "In the past, customers would order something at 11 [p.m.] and choose next-day delivery, even though we couldn't deliver the next day because our cut-off time may have been noon the day before," says Lituchy, 34. The exception wasn't made clear to patrons, and Delightful Deliveries received complaints. But the company's site has since eliminated the problem-it now calculates, based on delivery cut-off times, when a product will arrive.
Lituchy says he knew about the Mail or Telephone Order Merchandise Rule, and it was "definitely a consideration" when changing his Web site's polices. "[But] our customers' needs were the driving force," he says. "It's important to do what's best for the customers."
After all, the rule is common sense: Tell your customers the truth about your delivery promises. Do this, and everyone-you, your customers and the government-will be satisfied.
Melissa Campanelli is a marketing and technology writer in Brooklyn, New York.
This story appears in the November 2003 issue of Entrepreneur. Subscribe »
