Hall of Fame/HallofFameCDROM.cdr/busi/guid516b.lzh/MAILORD.STA

Text File | 1990-10-12 | 19KB | 380 lines

/* Here is the full text of mailorder sales regulations of
the Federal Trade Commission together with comments. */


                        PART 435-MAIL ORDER
                           MERCHANDISE

Sec.
435.1 The Rule.
435.2 Definitions.

435.1 The Rule

In connection with mail order sales in commerce, as "commerce" is
defined  in the Federal Trade Commission Act, it  constitutes  an
unfair method of competition, and an unfair or deceptive act  and
practice for a seller:

(a)(1)  To  solicit any order for the sale of merchandise  to  be
ordered by the buyer through the mails unless, at the time of the
solicitation, the seller has a reasonable basis to expect that he
will  be able to ship any ordered merchandise to the buyer:   (i)
Within  that  time clearly and conspicuously stated in  any  such
solicitation,  or  (ii) if no time is clearly  and  conspicuously
stated,  within  thirty  (30) days after receipt  of  a  properly
completed order from the buyer.

/* Paragraph a(1) provides the general rules that mailorder
sellers must either ship within thirty days or CONSPICUOSLY
advise that the time period for an order is longer. */

(2)  To  provide  any buyer with any revised  shipping  date,  as
provided  in paragraph (b) of this section, unless, at  the  time
any  such  revised shipping date is provided, the  seller  has  a
reasonable  basis  for  making such  representation  regarding  a
definite revised shipping date.

(3) To inform any buyer that he is unable to make any representa-
tion regarding the length of any delay unless (i) the seller  has
a reasonable basis for so informing the buyer and (ii) the seller
informs the buyer of the reason or reasons for the delay.

(4) In any action brought by the Federal Trade Commission, alleg-
ing a violation of this part, the failure of a  respondent-seller
to  have records or other documentary proof establishing his  use
of  systems and procedures which assure the shipment of  merchan-
dise  in  the ordinary course of business within  any  applicable
time set forth in this part will create a rebuttable  presumption
that the seller lacked a reasonable basis for any expectation  of
shipment within said applicable time.

(b)(1)  Where a seller is unable to ship merchandise  within  the
applicable  time set forth in paragraph (a) (1) of this  section,
to  fail  to offer to the buyer, clearly  and  conspicuously  and
without  prior demand, an option either to consent to a delay  in
shipping  or  to cancel his order and receive  a  prompt  refund.
Said  offer  shall  be made within a reasonable  time  after  the
seller  first becomes aware of his inability to ship  within  the
applicable  time set forth in paragraph (a)(1) of  this  section,
but in no event later than said applicable time.

/* Here is the procedure which must be followed when an order is
not shipped within the allowed time frame. */

(i)  Any offer to the buyer of such an option shall fully  inform
the buyer regarding his right to cancel the order and to obtain a
prompt refund and shall provide a definite revised shipping date,
but  where  the seller lacks a reasonable basis for  providing  a
definite revised shipping date the notice shall inform the  buyer
that  the seller is unable to make any  representation  regarding
the length of the delay.

(ii)  Where the seller has provided a definite  revised  shipping
date which is thirty (30) days or less later than the  applicable
time set forth in paragraph (a)(1) of this section, the offer  of
said  option  shall expressly inform the buyer that,  unless  the
seller receives, prior to shipment and prior to the expiration of
the  definite  revised shipping date, a response from  the  buyer
rejecting  the delay and cancelling the order, the buyer will  be
deemed  to have consented to a delayed shipment on or before  the
definite revised shipping date.

(iii)  Where the seller has provided a definite revised  shipping
date which is more than thirty (30) days later than the  applica-
ble  time set forth in paragraph (a)(1) of this section or  where
the seller is unable to provide a definite revised shipping  date
and  therefore  informs the buyer that he is unable to  make  any
representation  regarding the length of the delay, the  offer  of
said option shall also expressly inform the buyer that his  order
will  automatically be deemed to have been cancelled  unless  (A)
the seller has shipped the merchandise within thirty (30) days of
the  applicable time set forth in paragraph (a)(1) of  this  sec-
tion, and has received no cancellation prior to shipment, or  (B)
the seller has received from the buyer within thirty (30) days of
said applicable time, a response specifically consenting to  said
shipping  delay.  Where the seller informs the buyer that  he  is
unable  to  make any representation regarding the length  of  the
delay,  the  buyer shall be expressly informed  that,  should  he
consent  to an indefinite delay, he will have a continuing  right
to  cancel  his order at any time after the applicable  time  set
forth  in  paragraph (a)(1) of this section by so  notifying  the
seller prior to actual shipment.

/* If a second delay to ship occurs you must receive an immediate
refund or expressly agree to a refund. */

(iv)  Nothing in this paragraph shall prohibit a seller who  fur-
nishes  a  definite revised shipping date pursuant  to  paragraph
(b)(1)(i)  of this section, from requesting, simultaneously  with
or  at any time subsequent to the offer of an option pursuant  to
paragraph (b)(1) of this section, the buyer's express consent  to
a  further unanticipated delay beyond the definite revised  ship-
ping  date in the form of a response from the buyer  specifically
consenting to said further delay.  Provided, however, that  where
the seller solicits consent to an unanticipated indefinite  delay
the solicitation shall expressly inform the buyer that, should he
so  consent  to an indefinite delay, he shall have  a  continuing
right to cancel his order at any time after the definite  revised
shipping  date by so notifying the seller prior to  actual  ship-
ment.

(2) Where a seller is unable to ship merchandise on or before the
definite revised shipping date provided under paragraph (b)(1)(i)
of  this section and consented to by the buyer pursuant to  para-
graph  (b)(1)(ii) or (iii) of this section, to fail to  offer  to
the buyer, clearly and conspicuously and without prior demand,  a
renewed option either to consent to a further delay or to  cancel
the  order and to receive a prompt refund.  Said offer  shall  be
made  within  a reasonable time after the  seller  first  becomes
aware  of his inability to ship before the said definite  revised
date,  but in no event later than the expiration of the  definite
revised shipping date:

Provided, however, That where the seller previously has  obtained
the  buyer's  express consent to an unanticipated delay  until  a
specific date beyond the definite revised shipping date, pursuant
to  paragraph  (b)(1)(iv) of this section or to a  further  delay
until  a specific date beyond the definite revised shipping  date
pursuant to paragraph (b)(2) of this section, that date to  which
the  buyer has expressly consented shall supersede  the  definite
revised  shipping date for purposes of paragraph (b)(2)  of  this
section.

(i)  Any offer to the buyer of said renewed option shall  provide
the  buyer with a new definite revised shipping date,  but  where
the seller lacks a reasonable basis for providing a new  definite
revised shipping date, the notice shall inform the buyer that the
seller is unable to make any representation regarding the  length
of the further delay.

(ii)  The  offer of a renewed option shall expressly  inform  the
buyer  that, unless the seller receives, prior to the  expiration
of the old definite revised shipping date or any date superseding
the  old  definite revised shipping date, notification  from  the
buyer  specifically  consenting to the further delay,  the  buyer
will  be deemed to have rejected any further delay, and  to  have
cancelled the order if the seller is in fact unable to ship prior
to  the expiration of the old definite revised shipping  date  or
any  date  superseding the old definite  revised  shipping  date:
Provided,  however,  That where the seller offers the  buyer  the
option to consent to an indefinite delay the offer shall express-
ly  inform the buyer that, should he so consent to an  indefinite
delay,  he shall have a continuing right to cancel his  order  at
any time after the old definite revised shipping date or any date
superseding the old definite revised shipping date.

(iii)  Paragraph  (b)(2) of this section shall not apply  to  any
situation where a seller, pursuant to the provisions of paragraph
(b)(1)(iv) of this section, has previously obtained consent  from
the  buyer  to an indefinite extension beyond the  first  revised
shipping date.

(3)  Wherever a buyer has the right to exercise any option  under
this part or to cancel an order by so notifying the seller  prior
to shipment, to fail to furnish the buyer with adequate means, at
the  seller's expense, to exercise such option or to  notify  the
seller  regarding  cancellation.  In any action  brought  by  the
Federal  Trade Commission alleging a violation of this part,  the
failure of a respondent-seller:

(i) To provide any offer, notice or option required by this  part
in  writing  and  by first class mail will  create  a  rebuttable
presumption  that the respondent-seller failed to offer  a  clear
and conspicuous offer, notice or option;

(ii) To provide the buyer with the means in writing (by  business
replay  mail or with postage prepaid by the seller)  to  exercise
any  option  or  to notify the seller  regarding  a  decision  to
cancel,   will   create  a  rebuttable   presumption   that   the
respondent-seller  did not provide the buyer with adequate  means
pursuant to paragraph (b)(3) of this section.

Nothing in paragraph (b) of this section shall prevent a  seller,
where he is unable to make shipment within the time set forth  in
paragraph  (a)(1) of this section or within a delay  period  con-
sented  to  by  the buyer, from deciding to  consider  the  order
cancelled  and providing the buyer with notice of  said  decision
within a reasonable time after he becomes aware of said inability
to ship, together with a prompt refund.

(c)  To  fail  to deem an order cancelled and to  make  a  prompt
refund to the buyer whenever:

(1) The seller receives, prior to the time of shipment, notifica-
tion from the buyer cancelling the order pursuant to any  option,
renewed option or continuing option under this part;

(2)   The seller has, pursuant to paragraph (b)(1)(iii)  of  this
section, provided the buyer with a definite revised shipping date
which  is  more than thirty (30) days later than  the  applicable
time  set forth in paragraph (a)(1) of this section or has  noti-
fied  the  buyer  that he is unable to  make  any  representation
regarding  the  length of the delay and the seller  (i)  has  not
shipped the merchandise within thirty (30) days of the applicable
time set forth in paragraph (a)(1) of this section, and (ii)  has
not  received the buyer's express consent to said shipping  delay
within said thirty (30) days;

(3)  The seller is unable to ship within the applicable time  set
forth in paragraph (b)(2) of this section, and has not  received,
within  the  said  applicable time, the buyer's  consent  to  any
further delay;

(4)  The seller has notified the buyer of his inability  to  make
shipment and has indicated his decision not to ship the  merchan-
dise;

(5)  The seller fails to offer the option prescribed in paragraph
(b)(1) of this section and has not shipped the merchandise within
the  applicable time set forth in paragraph (a)(1) of  this  sec-
tion.

(d) In any action brought by the Federal Trade Commission  alleg-
ing a violation of this part, the failure of a  respondent-seller
to  have records or other documentary proof establishing his  use
of  systems and procedures which assure compliance, in the  ordi-
nary course of business, with any requirement of paragraph (b) or
(c) of this section will create a rebuttable presumption that the
seller failed to comply with said requirements.


Note  1:   This part shall not apply to  subscriptions,  such  as
magazine  sales, ordered for serial delivery, after  the  initial
shipment is made in compliance with this part.

Note 2:  This part shall not apply to orders of seeds and growing
plants.

Note  3:   This  part  shall  not  apply  to  orders  made  on  a
collect-on-delivery (C.O.D.) basis.

Note  4:  This part shall not apply to transactions  governed  by
the  Federal  Trade Commission's Trade Regulation  Rule  entitled
"Use  of  Negative Option Plans by Sellers in Commerce",  16  CFR
Part 425.

Note 5:  By taking action in this area, the Federal Trade Commis-
sion  does not intend to preempt action in the same area, by  any
State, municipal, or other local government.  This part does  not
annul or diminish any rights or remedies provided to consumers by
any  State law, municipal ordinance, or other  local  regulation,
insofar as those rights or remedies are equal to or greater  than
those  provided  by this part.  In addition, this part  does  not
supersede those provisions of any State law, municipal  ordinance
or   other local regulation which impose obligations or  liabili-
ties  upon sellers, when sellers subject to this part are not  in
compliance therewith.  This part does not supersede those  provi-
sions  of  any  State law, municipal ordinance,  or  other  local
regulation  which are inconsistent with this part to  the  extent
that  those provisions do not provide a buyer with  rights  which
are equal to or greater than those rights granted a buyer by this
part.   This part also supersedes those provisions of  any  State
law,  municipal  ordinance, or other local  regulation  requiring
that a buyer be notified of a right which is the same as a  right
provided  by this part but requiring that a buyer be give  notice
of  this right in a language, form, or manner which is  different
in any way from that required by this part.

In  those instances where any State law, municipal ordinance,  or
other  local regulation contains provisions, some but not all  of
which  are partially or completely superseded by this  part,  the
provisions  or portions of those provisions which have  not  been
superseded retain their full force and effect.

/* The regulation is a MINIMUM standard and states may set more
stringent standards should they so desire. */

Note 6:  If any provision of this part or its application to  any
person,  partnership,  corporation, act or practice is  held  in-
valid,  the  remainder  of this part or the  application  of  the
provision  to any other person, partnership, corporation, act  or
practice shall not be affected thereby.

Note  7:  Section 435.1(a)(1) of this part governs all  solicita-
tions where the time of solicitation is more than 100 days  after
promulgation  of this part.  The remainder of this  part  governs
all  transactions  where receipt of a  properly  completed  order
occurs more than 100 days after promulgation of this part.

For purposes of this part:

(a)  "Shipment"  shall mean the act by which the  merchandise  is
physically placed in the possession of the carrier.

(b) "Receipt of a properly completed order" shall mean:

(1)  Where there is a credit sale and the buyer has not previous-
ly tendered partial payment, the time at which the seller charges
the buyer's account;

(2) Where the buyer tenders full or partial payment in the proper
amount  in  the form of cash, check or money order, the  time  at
which the seller has received both said payment and an order from
the buyer containing all the information needed by the seller  to
process and ship the order.

Provided, however, that where the seller receives notice that the
check  or money order tendered by the buyer has not been  dishon-
ored  or that the buyer does not qualify for a credit  sale  "re-
ceipt  of  a properly completed order" shall means  the  time  at
which (i) the seller receives notice that a check or money  order
for  the  proper amount tendered by the buyer has  been  honored,
(ii)  the  buyer tenders cash in the proper amount or  (iii)  the
seller  receives  notice that the buyer qualifies  for  a  credit
sale.

(c) "Refund" shall mean:

(1)  Where  the  buyer tendered full payment  for  the  unshipped
merchandise  in the form of cash, check or money order, a  return
of the amount tendered in the form of cash, check or money order;

(2) Where there is a credit sale:

(i)  And the seller is a creditor, a copy of a credit  memorandum
or  the  like or an account statement reflecting the  removal  or
absence of any remaining charge incurred as a result of the  sale
from the buyer's account;

(ii) And a third party is the creditor, a copy of an  appropriate
credit  memorandum or the like to the third party creditor  which
will  remove the charge from the buyer's account or  a  statement
from  the seller acknowledging the cancellation of the order  and
representing that he has not taken any action regarding the order
which  will  result in a charge to the buyer's account  with  the
third party;

(iii)  And the buyer tendered partial payment for  the  unshipped
merchandise  in the form of cash, check or money order, a  return
of the amount tendered in the form of cash, check or money order.

(d) "Prompt refund" shall mean:

(1)  Where  a  refund is made pursuant  to  paragraph  (c)(1)  or
(2)(iii)  of  this section a refund sent to the  buyer  by  first
class mail within seven (7) working days of the date on which the
buyer's right to refund vests under the provisions of this part;

(2) Where the refund is made pursuant to paragraph (c)(2) (i)  or
(ii)  of this section, a refund sent to the buyer by first  class
mail  within  one (1) billing cycle from the date  on  which  the
buyer's right to refund vests under the provisions of this part.


(e)  The "time of solicitation" of an order shall mean that  time
when the seller has:

(1)  Mailed or otherwise disseminated the solicitation to a  pro-
spective purchaser,

(2) Made arrangements for an advertisement containing the solici-
tation to appear in a newspaper, magazine or the like or on radio
or television which cannot be changed or cancelled without incur-
ring substantial expense, or

(3) Made arrangements for the printing of a catalog, brochure  or
the  like which cannot be changed without  incurring  substantial
expense,  in which the solicitation in question forms  an  insub-
stantial part.