FTC Issues Staff Report on Proposed Revisions to Mail or Telephone Order Merchandise Rule

On Monday, the FTC released a Staff Report on the Mail or Telephone Order Merchandise Rule recommending that the Commission adopt the amendments in the Notice of Proposed Rulemaking issued on September 30, 2011. The Staff specifically recommended the following four amendments to the Rule:

1. Require sellers to process third-party credit card refunds within 7 business days after the buyer’s right to the refund vests.
2. Clarify the refund obligations for orders placed using non-enumerated payment methods (e.g., debit cards) by: (1) setting shipment and notification requirements for non-enumerated payments; and (2) requiring sellers to make prompt refunds for non-enumerated payments by either reversing the payment or sending, cash, check, or money order within 7 business days.
3. Permit refunds and refund notices by any means at least as fast and reliable as first class mail.
4. Clarify that the Rule covers all Internet merchandise, regardless of Internet access method.

The proposed amendments address some of the outdated issues with the Rule, namely its express references to certain types of technology (e.g., “telephone Internet access”) and payment methods. The Staff notes that the proposed amendments respond to concerns that imposing specific refund requirements for enumerated payment methods like credit cards and non-enumerated payment methods like debit cards place an undue burden on sellers by harmonizing these obligations across payment methods and with Regulation Z. Additionally, the amendments provide flexibility to sellers when refund by the original payment method is not possible, or when refund by cash, check, or money order is cheaper.

The Report will remain open for public comment until July 15, 2013. Companies offering products online or by mail should continue to watch these developments.