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National Auto Dealers Association (NADA) Aug 4, 2022 4 min read

Update on FTC Mail, Internet, or Telephone Order Merchandise Rule

NADA recently alerted members to a little-known requirement under what is known as the Mail, Internet, or Telephone Order Merchandise Rule that could arise as a potential issue for dealers as a result of the current market conditions. On August 1st, the Federal Trade Commission (FTC) announced two enforcement actions under this Rule. A few things to note from the FTC notice published yesterday – according to the FTC:

1.    First…

a refresher on the requirements of the Mail, Internet, or Telephone Order Merchandise Rule. Under the Mail Order Rule, at the time sellers solicit an order, they must have a reasonable basis they will be able to ship: 1) within the stated time; or 2) if no time is stated, within 30 days. If a shipment is delayed, the Rule lays out sequential if-then steps sellers must take to ensure buyers aren’t left in the lurch…. 

2.   There is no “COVID exception” to the Mail Order Rule.  

“Certainly the pandemic has had an impact on the supply chain. But as the Court in the American Screening case observed, “[T]he law provides no exceptions for sellers that do their ‘best’ during pandemics….That’s because the Mail Order Rule presciently built-in procedures for times such as these. Assuming a seller had a reasonable basis to make a shipping claim in the first place, the Mail Order Rule includes step-by-step instructions on how to address an unanticipated shipment delay and still comply with the law. 

3.    Without records proving compliance, there is a rebuttable presumption of a violation of the Rule:

…If a company fails to have “records or other documentary proof establishing its use of systems and procedures which assure compliance,” the Rule establishes “a rebuttable presumption that the seller failed to comply with said requirement.” 

While there may be arguments/reasons why this Rule does not apply to specific dealers, out of an abundance of caution it may be worthwhile for many dealers to review their practices in light of the FTC guidance and attached materials to ensure appropriate systems and procedures are in place to meet any applicable requirements under this rule.

Jeff Weber
Chairman, Regulatory Affairs Committee 

This memo is not legal advice and only addresses this federal obligation, not any similar or related obligations under federal or state law. Consult your attorney about this rule or any related compliance obligation.