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1991-06-27
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/* 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.