ADventures in Law

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Well the holidays and big holiday shopping season are behind us, but now we have all of the January clearance sales and upcoming Valentine’s Day shopping.&nbsp; American consumerism rarely takes a rest.&nbsp; We are also in the peak of winter when weather-related delays can kick in.&nbsp; This is the time of year where we see companies running afoul of the FTC’s Mail Order Rule. You can’t always guarantee your fulfillment house will be able to keep up with demand, but there are ways you can protect yourself from a dreaded post-holidays knock at the door from the FTC if you missed your shipping deadlines and disappointed customers complained. There are some good lessons to be learned from the FTC’s recent enforcement action involving resale shoe retailer <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/GOATProposedOrderreJudgment.pdf" target="_blank" rel="noreferrer noopener">GOAT</a>.

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GOAT largely facilitates sales between individuals seeking the latest in tennis shoes with those who have the goods for sale. GOAT also promises to authenticate the goods to ensure buyers are getting genuine items. You can pay extra to expedite this process, and to expedite shipping, including via “instant standard” and “instant next day.” GOAT advertised that if you ordered before 11 a.m. your order would ship out the same day. The FTC alleged that over a third of the instant orders were not shipped the same day. Thus, the FTC alleged, GOAT did not have a reasonable basis to promise it could process orders this quickly. The <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/GOATComplaint.pdf" target="_blank" rel="noreferrer noopener">complaint</a> goes on to allege that GOAT failed to keep records regarding fulfillment timing, as required by the rule, and that numerous customers complained. When these customers complained to GOAT, it was allegedly hard for them to reach customer service and hard to get a prompt satisfactory resolution. In addition to shipping delays, the complaint alleged that GOAT made it difficult for customers to exercise its satisfaction guarantees and did not pay full refunds to buyers not happy with their purchases unless the customer complained multiple times and escalated their issues.

Every retailer has inevitable delays in shipping now and then. Stuff happens. Stuff often happens over the holiday season, when fulfillment houses are incredibly taxed and any snowstorm or power outage can send things into a short-term tailspin. The Mail Order Rule requires that you have processes in place to deal with such events — that if you are going to miss a shipping deadline, you give your customers a notice and new estimated shipping date and give them an opportunity to cancel their order. (If this happens a second time, you need to get express approval to ship late, or else cancel with a cash refund.) It is highly recommended that retailers kick the tires on these processes periodically, particularly if changing fulfillment houses. And consider adding some wiggle room to shipping timelines during busy seasons.

But perhaps even more important is making sure your customer service is prepared to handle inquiries and is informed and prepared if there is a large volume of delays. The Mail Order Rule cases we see almost invariably follow from multiple things derailing at once — late shipping coupled with backups and difficulties customers face trying to contact customer service. As well, customer service that requires escalation to get full relief often results in complaints to the BBB or state AGs, all of which can get the FTC’s attention. Having extra hands to answer the phones or respond to email inquiries quickly and to offer full cash refunds up front (not gift cards) will better position your company to avoid a Mail Order Rule investigation or related problems over satisfaction guarantees.

One of the interesting things in the GOAT action is a separate count related to customer service, with the FTC alleging it is an unfair business practice not to have adequate customer service. And this was something that received bipartisan support, so it may gain traction in future cases even after a change to an <a href="https://www.pbs.org/newshour/amp/politics/trump-names-andrew-ferguson-to-head-the-federal-trade-commission" target="_blank" rel="noreferrer noopener">Andrew Ferguson-led FTC in 2025</a>.

For more information about the new Mail Order Rule, check out our AD Nauseam podcast <a href="https://www.bakerlaw.com/insights/ad-nauseam-youre-a-mean-one-mr-mail-order-rule/." target="_blank" rel="noreferrer noopener">here</a>.

Complying with the Mail Order Rule and Satisfaction Guarantees: Poor Customer Service Can Cost Millions