FTC to E-tailers: Don’t Be Naughty!

The Federal Trade Commission has conducted its annual holiday surf of Internet retailers and sent letters to 37 e-tailers warning them about potential violations of consumer protection rules regarding warranties, shipping claims and rebates. This year’s surf involved 51 Web retail sites.

The FTC review found that 14 of the 16 sites selling products with warranties failed to provide adequate information about the warranties. The FTC’s Pre-Sale Availability Rule requires that written warranties on consumer products costing more than $15 be made available to consumers before they buy.

The FTC staff sent letters to these sites advising them to include on their Web sites either the full text of written warranties or a general statement that warranties could be obtained free upon request. The letters also advised how clearly and properly labeled hyperlinks can be used to provide warranty information.

The FTC staff also found that 44 sites made “quick ship” claims, which are governed by the FTCs Mail or Telephone Order Rule. The regulations require that sellers ship orders to buyers within the time stated in the ad, or, if no time is stated, within 30 days after receiving the order.

The FTC staff letters to e-tailers remind merchants that if they are unable to ship, for example, within a promised 48-hour period, they must notify their customers and give them the option to cancel their orders.

During the 1999 holiday season, many Internet sellers claimed they could ship extremely quickly, from “overnight” to 48 hours and 72 hours. Some were unable to ship when they said they would, and the FTC brought civil penalty actions against seven well-known e-tailers for allegedly violating the Mail or Telephone Order Rule. The companies paid more than $1.5 million in penalties.

The FTC staff found fewer problems during the 2000, 2001, and 2002 holiday seasons.

In announcing the surf results, Howard Beales, director of the FTC’s Bureau of Consumer Protection, said, “As more consumers shop for their holiday purchases online, we want to be certain they get what they expect, when they expect it. Online shoppers should have as much knowledge of the product, warranties, and rebates as they would if they shopped in a brick and mortar store.”

The FTC staff also advised two sites selling apparel to make FTC-required country-of-origin disclosures. The agency requires that most textile products sold to consumers through print or online catalogs have an origin disclosure in the product information as to whether each item was “Made in USA,” “imported,” or both.

Sites offering rebates were also subject to the FTC holiday surf, with the agency sending 11 letters advising e-tailers that to ensure that their advertising is not misleading, they should disclose in a clear and prominent manner: the type of rebate offered (in-store or mail-in); the material terms of the rebate offer; and the total price consumers must pay at the time of purchase to receive the rebate. The letters also advised the sites to send their rebates to consumers within the time promised or within a reasonable time if no time-frame is mentioned.