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FTC Settles with Fashion Retailer for Record $9.3 Million for Alleged Mail Order Rule Violations

Online shopping has taken on greater importance for many people homebound since the coronavirus lockdowns began. And, while many are lounging at home in pajamas and yoga pants, there are still a lot of fashion-conscious shoppers out there anxious to take advantage of bargain prices and speedy deliveries. But how is a stay-at-home fashionista supposed to remain au courant if the clothes she orders are out of style by the time they arrive? The Federal Trade Commission (FTC) has something to say about this. The FTC’s Trade Regulation Rule Concerning the Sale of Mail, Internet or Telephone Order Merchandise (the Mail Order Rule), requires that companies live up to their shipping promises and, to quote fashion guru Tim Gunn, “make it work” or give customers the option to get their money back. On April 21, 2020, the FTC announced a settlement with California retailer Fashion Nova for $9.3 million, the highest sum ever imposed for violations of the Mail Order Rule, for making assurances about its shipping times that came apart at the seams.

The Mail Order Rule bars 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. In the event the company cannot ship the goods, it must offer customers the option either to consent to a further delay or to cancel the order and to receive a refund – not simply store credit or a gift card – within a reasonable time.

According to the FTC’s complaint, Fashion Nova made numerous representations about the speed of its shipping. Despite marketing promises of “Free 2 Day Shipping on all U.S. Orders $75 and Up,” “Fast Canada Shipping Only $10,” and “Fast International 6-10 Shipping Only $15,” Fashion Nova failed to deliver the goods. Items were frequently out of stock or materially different from what consumers ordered – for example, a different size, damaged, or used. Moreover, the company failed to provide an expedient way for customers to cancel orders and neglected to issue prompt refunds. The FTC also charged Fashion Nova with making false claims about the speed of its shipping options in violation of Section 5 of the FTC Act.

In addition to the fine, the stipulated order permanently restrains Fashion Nova from making representations about its shipping being faster than 30 days without clearly and conspicuously disclosing, before payment, the date by which the merchandise will be shipped or received.

Even with the inevitable delays caused by increased online shopping during the current pandemic, it is still vital for retailers to ensure they are fulfilling orders in compliance with the Mail Order Rule. Expensive settlements like this one are so last season.

© 2020 Keller and Heckman LLPNational Law Review, Volume X, Number 119


About this Author

Sheila Millar, Keller Heckman, advertising lawyer, privacy attorney

Sheila A. Millar counsels corporate and association clients on advertising, privacy, product safety, and other public policy and regulatory compliance issues.

Ms. Millar advises clients on an array of advertising and marketing issues.  She represents clients in legislative, rulemaking and self-regulatory actions, advises on claims, and assists in developing and evaluating substantiation for claims. She also has extensive experience in privacy, data security and cybersecurity matters.  She helps clients develop website and app privacy policies,...