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New FTC Regulation Makes Speedy Shipping a Requirement

There have always been incentives for getting orders out on time: customer satisfaction, quicker inventory turnover, and ease of bookkeeping. Now retailers have another reason: avoiding millions of dollars in fines.

Last week, the Federal Trade Commission released a statement on its latest directive: the Mail or Telephone Order Merchandise Trade Regulation Rule. Intended to stifle the abuses of unscrupulous direct-order merchants (including eCommerce, mail-order, and phone/fax catalogers), this rule lays out strict requirements for when and how stores ship out products to their customers.

In short, vendors must comply with the following:

  • Publicly state how long shipping will occur after an order is processed. If no period is stated, a maximum of 30 days will be assumed.
  • Immediately notify customers if an order will take longer than the stated period to ship, or if the product will not ship at all for any reason.
  • Unless a customer specifically requests to wait longer, an immediate refund must be issued without stipulation.

Note that this doesn’t apply to shipping speed, but only the time between order processing and initiation of shipping. That said, the maximum fine of $16,000 is per order, as well as other forms of civil redress. In total, this means hefty financial liability for sellers with multiple violations.

Retailers of all types should review the new rule in full and ensure operational efficiency keeps packages leaving the warehouse on time. Violators should shape up their fulfillment processes before they’re forced to write checks to Washington.