In a ground breaking decision, a Logan Utah Jury recently decided that under FTC Rule 435 a "Properly Completed Order" is received by an telephone order company after an application for credit has been approved. This is in direct contradiction to the FTC Handbook on the Mail Order Rule. The Rule is known as the 30 day Rule, but has an exception to the rule to allow the manufacturer/distributor an additional 20 if there is an application for credit to pay for the order. The Handbook, which explains the rule in simple to understand terms, state in part:
The "clock" on your obligation to ship or take other action under the Rule begins as soon as you receive a "properly completed" order. An order is properly completed when you receive the correct full or partial (in whatever form you accept) payment, accompanied by all the information you need to fill the order. Payment may be by cash, check, money order, the customer's authorization to charge an existing account (including one you have created for the customer), the customer's application to you for credit to pay for the order, or any substitute for these transactions that you accept.
See: When Your Fulfillment Or Other Obligations Begin ("Properly Completed" Orders)
http://www.ftc. Gov/bcp/edu/pubs/business/adv/bus02. Shtm
When this was tested before the Courts however, the Judge Ruled that the actual Rule must be used to Judge the case, not an interpretation of the Rule - such as the FTC's Handbook. The Rule state:
(ii) if no time is clearly and conspicuously stated, within thirty (30) days after receipt of a properly completed order from the buyer, Provided, however, where, at the time the merchandise is ordered the buyer applies to the seller for credit to pay for the merchandise in whole or in part, the seller shall have 50 days, rather than 30 days, to perform the actions required in 435.1 (a) (1) (ii) of this part.
Http://ecfr. Gpoaccess. Gov/cgi/t/text/text-idx? C=ecfr&rgn=div5&view=text&node=16:1.0.1.4. 49&idno=
16#16:1.0.1.4.49.0. 38.1
This look well and good from up to this point, but the problem lies in the wording "upon a properly completed order". When you research the Rule, you would expect to find wording reflecting the fact that a properly completed order is upon acceptance of a completed credit application to pay for the merchandise.instead the definition of a "Properly Completed Order" reads:
(d) Receipt of a properly completed order shall mean, where the buyer tenders full or partial payment in the proper amount in the form of cash, check, money order, or authorization from the buyer to charge an existing charge account, the time at which the seller receives both said payment and an order from the buyer containing all of the information needed by the seller to process and ship the order.
Http://ecfr. Gpoaccess. Gov/cgi/t/text/text-idx? C=ecfr&rgn=div5&view=text&node=16:1.0.1.4. 49&idno= 16#16:1.0.1.4.49.0. 38.2
This means that there must now be an existing account, or in the case of applied credit, the manufacturer/distributor now has 50 days AFTER the application is approved to ship the product. This Case Law now allows companies to sell products online, and in cases where they offer extended credit on the sale, they now have 50 days to ship their product after an unspecified period of time to approve the customers credit. A computer retainer for instance could now legally take a year to process the application for credit and still have an additional 50 days to ship the product.
The Code, which is what is tried in a Court of Law, is in direct contradiction with the intent of the FTC, and what is written in their information guides distributed to the public and the online community. See PrivacyLink, LLC vs. Fences4Less.com Utah State Court.
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