FTC Files Complaint Alleging Mail Order Rule Violations

Kelley Drye & Warren LLP

As the pandemic continues to turn consumers to online shopping, shoppers report increasing dissatisfaction with websites that advertise “Fast Shipping,” “2-Day Shipping,” or make similar representations about speedy shipping and then fail to deliver. In the last few months the FTC has received record numbers of complaints related to online shopping, and most of them relate to items that were ordered but never delivered. Many of those unshipped items were personal protective equipment (“PPE”). So it should not be a surprise that the FTC just  filed a complaint in federal court against SuperGoodDeals.com and its owner, alleging that SuperGoodDeals violated the Mail Order Rule by representing “Pay Today, Ships Tomorrow,” then taking weeks to ship the PPE products.

As described under the FTC’s Mail Order Rule, a seller needs a “reasonable basis” for shipping within a certain time, and, if there are delays, it must notify purchasers and in certain circumstances cancel and refund orders. In this recent lawsuit, the FTC also alleges violation of the FTC Act by falsely advertising to ship items within one business day and by selling items that were not “authentic, certified, or specifically branded. As discussed in our previous post, failure to comply can have significant consequences. For example, a few months ago Fashion Nova agreed to pay a $9.3 million civil penalty and to implement certain procedures, including allowing customers to easily request refunds for their delayed orders instead of being issued gift cards for unshipped items.

The claim is pending in federal court in New York, but companies should not wait for a decision or settlement to consider the following key takeaways: (1) although COVID-19 continues to disrupt distribution chains, have a reasonable basis for shipping representations; (2) if (or maybe “when”) an unexpected delay occurs,  follow the Mail Order Rule’s specific requirements for notice and handling of open orders; and (3) should monitor customer feedback to identify shipping issues and address them quickly.

Summer associate Leticia Salazar contributed to this post. Ms. Salazar is not a practicing attorney and is practicing under the supervision of principals of the firm who are members of the D.C. Bar.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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