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This holiday season Web retailers should be very careful about quick shipment promises that they cannot keep. The Federal Trade Commission is getting involved to help thwart a repeat of the delivery disaster of 1999, which resulted in thousands of online purchases not being delivered on time before Christmas. Although tardy deliveries were not as big a problem last year, because online holiday sales this year are expected to exceed those of 2000, the FTC currently is close on the scene. FTC REVIEW The FTC has just conducted a review of 110 Internet retailers that offer popular-selling holiday merchandise. The point of the FTC’s “HolidaySmarts.com” review has been to ascertain whether retailers have been making “quick-ship” claims with respect to online sales. These claims assure consumers that items in stock usually will ship within 24 to 48 hours from when an order is placed. The review revealed that 52 out of the 110 e-tailers have been making quick ship claims. FTC TARGETS SPECIFIC “QUICK-SHIP” E-TAILERS Based on the review, the FTC has sent letters to 72 e-tailers which, although worded in a friendly manner, nevertheless contain a strong implied warning: “as we enter the holiday shopping season, we want to be sure you are aware of and comply with applicable federal regulations.” The FTC points out in its letter that online shipment claims are governed by what is called the Mail Order Rule. This rule obligates sellers to ship orders to purchasers within the time promised, and if no time is provided, within 30 days. If a seller is not able to ship within the promised or 30 day time frame, the seller is required to notify the purchaser of the delay within the original shipment time and give an updated shipping date. Furthermore, sellers that are unable to honor promises of shipments within 48 hours are required to notify their purchasers during that time frame and allow them the opportunity to cancel the purchases. Failure to comply likely will lead to adverse legal ramifications. Indeed, the FTC previously brought civil penalty actions against seven high profile online retailers for their failure to comply with the Mail Order Rule during the 1999 holiday season. The companies combined ultimately forked over more than $1.5 million in penalties. GETTING IT RIGHT — FOR GOODNESS SAKE This holiday season, online retailers should get it right, not only for goodness sake, but to spare themselves a legal tangle with the FTC. They should make promises they can keep regarding shipment dates, and in all other respects. For example, warranties should be provided and followed. Under the Warranty Rule, a written warranty must be provided in advance for purchases over $15, and online retailers are required to include warranty information on their Web sites. E-tailers who keep their promises and follow the law will avoid a lump of coal in their stockings from the FTC this holiday season. Eric J. Sinrod is a partner in the San Francisco office of Duane Morris, where he focuses on technology and litigation matters. His Web site is sinrodlaw.com and his firm’s site is Duane Morris.Mr. Sinrod may be reached by e-mail at [email protected]

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