U.S. Issues E-tail Delivery Warning

With an eye toward staving off a repeat of the holiday fulfillment woes that left thousands of online shoppers without gifts last Christmas morning, the U.S. Federal Trade Commission (FTC) has warned e-tailers against making promises they cannot keep.

The agency sent letters to over 100 e-tailers to remind them of their obligations under the 1975 Mail or Telephone Order Merchandise Rule, which spells out the ground rules for making promises about shipment time frames, notifying consumers of unexpected delays, and refunding customer purchases.

In the letter, e-tailers are advised that they should base their delivery guarantees on “facts, not hopes” and should have a reasonable basis for stating that a product can be shipped within a certain time. However, the FTC points out that the Rule does allow e-tailers to notify consumers that shipment may take longer than advertised, as long as such notification is made before consumers actually complete their order.

On the Clock

E-tailers were also warned that the shipment clock starts ticking as soon as they receive payment information from consumers and not when they process payments.

In the event that an unexpected delay occurs and shipment cannot be made as promised, e-tailers are required to notify customers within the original delivery window that there will be a delay and advise them of their right to cancel the transaction for a full refund.

While the rule applies to all e-commerce companies, the FTC said it was targeting e-tail pure-plays because most brick-and-mortar and brick-and-click retailers were aware of their obligations under the Rule.

Learning from Past Mistakes

For their part, e-tailers are making an effort to avoid disappointing customers. Amazon and Toysrus.com are enticing consumers to do their online holiday shopping early this year by offering free shipping on purchases of US$100 or more that are made through November 22nd.

Additionally, a survey released Wednesday by ePublicEye.com found that 10 percent of the 1,390 e-tailers surveyed plan to add more staff to help with the expected online holiday shopping rush.

At least some of the sites cited for delivery problems last year are now urging consumers to order early. For instance, CDNow is informing its customers who want standard delivery that they must order by December 11th to ensure delivery in time for Christmas.

Those willing to pay extra for 2-day delivery have until noon EST on December 19th to order.

Big Promises

In advance of this year’s warning,FTC staffers surfed more than 200 e-commerce sites looking for shipment promises “made to entice consumers to their sites this holiday season.” The agency said it found that almost 100 sites made “quick-ship claims” promising that in-stock items usually ship within 24 to 48 hours after an order is placed.

Last year, many e-tailers tried to lure consumers with promises of speedy shipment — anything from overnight to 48 or 72 hour-delivery of their goods. Seven e-tailers, including Macys.com and Toysrus.com, failed to meet their shipping obligations to such an extent that the FTC fined them more than $1.5 million.