Your Business Online | Professional Jeweler

September 26, 2000
Holiday Nightmares
E-tailers who didn't live up to their shipping promises last year are paying $1.5 million in fines this year

Holiday shopping may mean extra sales for e-tailers, but it can also mean extra headaches and legal problems. A surge in online purchasing last holiday season left many large e-tailers scrambling to get products shipped on time. To get even more sales, some companies promised prompt delivery despite knowing they couldn't ship merchandise on-time. When the holidays came but the gifts didn't, customers were furious and the Federal Trade Commission stepped in.

Last month, the FTC fined some online stores, including,, CDNow and KBKids, for failing to give customers enough notice of shipping delays and for continuing to promise deliveries they could not make. Collectively the fines total $1.5 million, and in addition to a $350,000 fine, must fund a consumer education campaign telling customers about their rights when shopping online. Plus, each company is required to provide proof it changed its shipping and order-processing procedures.

These companies violated the FTC's Mail and Telephone Order Rule, which requires retailers to ship goods within the dates promised or within 30 days if no date is promised. If the company cannot ship orders on time, the rule requires retailers to provide notice to customers with a revised shipping date and give them the opportunity to agree to the delay or to cancel the order.

With holiday shopping fast approaching, many e-tailers still aren't prepared for what is to come. Without proper planning, it could be easy for any e-tailer to fall behind with orders and unintentionally violate the FTC rule. Here are some tips on how to save your company problems and lawsuits:

  • Prepare in advance for increased online orders. Also, have a plan for what to do if orders exceed what you are prepared for. Be ready to hire additional help.
  • Be upfront with your customers. Post a notice about shipping times on your site. If there will be delays, your customers will want to know in advance of purchasing. Remember, customers who need their orders right away may not purchase from you if they know you can't ship in time, but if you don't tell them and the shipment is late, you will have lost those customers forever.
  • Make sure your employees know about any shipping delays. If customers call or e-mail asking about shipments, you don't want an uninformed employee to mislead them.
  • If orders exceed your ability to make shipments, post a prominent notice informing customers all new orders will be delayed.
  • Let all customers know if their orders will not be shipped on time. Give them the option to cancel.
Being prepared and knowing the laws should keep your company out of trouble this holiday season. This is the make-or-break time for e-tailers. If you can't get customers their orders within a reasonable amount of time, they may lose faith in you completely. Most companies that were around last year for the holidays are prepared for this year. They started preparing in January. Don't let them leave you in the dust.

- by Julia M. Duncan