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) monitor customer feedback to identify shipping issues and address them quickly.
Update: Our article, Top FTC Rules and Guides You Should Keep in Mind, and other mail order rule blog posts may also be useful.
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.
Join us for:
Trade Association Antitrust 101
Please join us on July 14 for a webinar geared toward association legal counsel, executives, marketers, staff and members, participants in association activities or attendees to association meetings.
Antitrust issues are a constant concern for trade associations and their members. Competition regulators will have associations and their members under even greater scrutiny as groups work together to address the ongoing challenges presented by COVID-19. Please join us for a webinar covering the basics of antitrust compliance for association legal and compliance counsel, executives, staff and outside advisers. This webinar is designed to help association professionals and those who attend association functions identify potential antitrust issues and provide practical guidance for effective compliance programs and mitigating risk. Finally, we will talk about how to respond to enforcement actions in the event your organization is involved in an investigation.
Discussion topics include:
- Antitrust law basics
- Best practices for associations and its membership
- Effective compliance and training programs
- Strategies for responding to warning letters or other enforcement actions