Online Merchants Beware: There’s a New FTC Rule on Internet Purchases

Technology   |   Intellectual Property   |   December 22, 2014
Download Download   
Share Share Page

The Federal Trade Commission (FTC) released a new rule, 16 C.F.R. § 435, covering Internet purchases. It became effective December 8—just in time for holiday shopping. The new rule expanded the FTC’s previously issued rule regarding phone and mail orders to include all Internet orders, even those made through a mobile device.

In particular, the new rule “prohibits sellers from soliciting mail, Internet, or telephone order sales unless they have a reasonable basis to expect that they can ship the ordered merchandise within the time stated on the solicitation or, if no time is stated, within 30 days.” Further, the rule requires buyer consent for delayed shipments and, if the buyer does not consent, the seller must promptly issue a refund. Specifically, sellers now have seven working days after a buyer’s right to a refund vests to process refunds for payments made through third party credit cards. The period for refunding purchases made by first party cards (e.g. where a seller itself issues the credit card) remains one billing cycle.

Online merchants must follow this new rule or risk severe penalties. Indeed, the rule gives the FTC the power to sue a seller for injunctive relief and civil penalties of up to $16,000 per violation. Additionally, the seller may be required to redress consumers. Sellers have the burden of proving compliance, and failure to provide the FTC with records or documentary proof establishing the use of procedures assuring shipment of merchandise within the applicable time creates a rebuttable presumption that the seller lacked a reasonable basis for expecting it would be able to timely ship orders. Thus, sellers should verify that they are retaining documentary proof of the procedures used to assure that merchandise was shipped within the timeframe the rule requires to help refute any claim of noncompliance by the FTC or buyers.

©2022 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Subscribe to Publications


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.