FTC proposes to extend Mail or Telephone Rule to e-commerce

By:  Paul Van Slyke

The FTC recently announced it proposes to extend its Mail or Telephone Order Merchandise Rule (the “Rule”) to orders placed online. If ultimately adopted, the proposed changes will affect advertising agencies and marketers of consumer goods doing business over the Internet.

The FTC is accepting public comments on the proposed extension of the Rule through December 14, 2011.  Comments can be filed online.

Proposed Changes to the Rule

In addition to extending the Rule to online commerce, the FTC is also proposing to make certain other changes.   Some examples of what is  in the proposal are:

·         an amendment to allow sellers to provide refunds and refund notices to buyers by any means at least as fast and reliable as first-class mail;

·         a clarification on sellers' obligations when buyers use payment methods not spelled out in the Rule — debit cards or prepaid gift cards, for example; and

·         a requirement that companies make refunds within seven working days for purchases using third-party credit, like Visa or MasterCard.  (For credit sales where the seller is the creditor — for example, when merchants have their own store charge cards — the refund deadline would remain one billing cycle.)

Other FTC Rules and Guides for Online Advertising

The Rule proposed to be added to online advertising is an addition to several existing statutes and FTC rules and guides bearing on the subject of online advertising and commerce.  For example:

·          the FTC has issued  the Advertising and Marketing on the Internet: Rules of the Road as an overview of all the FTC rules and guides that apply;

·         The FTC Staff paper Dot com Disclosures: Information About Online Advertising offers practical tips on how to make effective disclosures online;

·         In 2000, the FTC issued a report Privacy Online: Fair Information Practices in the Electronic Marketplace with guidelines for websites that collect personal information from consumers; and

·         In 1998, Congress passed the Children's Online Privacy Protection Act ("COPPA"), which governs collection of personal information from children under the age of 13.  The FTC guides Children's Online Privacy Protection Rule and How to Comply with the Children's Online Privacy Protection Rule give additional guidance and practical suggestions on compliance with COPPA.

Locke Lord has an Advertising & Marketing team experienced in compliance with FTC rules and submitting comments on proposed rules.