Wednesday, 25 September 2013


An Overview


The intent of this report is to give the newcomer to the mail

order business an overview of those laws and regulations that

most affect the small mail order operator. The intent is not to

give legal advice. Such advice should always be sought form an

attorney. Only those laws and regulations that apply to the

small order operator most directly are covered. Advice is given

from the perspective of an operator of a mail order business

rather than from a legal perspective.

For those interested in an in-depth review of the laws which

affect the mail order industry, it is recommended that you read

the following book: The Direct Marketer's Legal Advisor, by

Robert J. Bosch, McGraw Hill Book Company.

The 30 Day Rule

To protect the consumer the FTC has enacted the Mail Order

Merchandise Rule which is generally referred to as the 30 Day

Rule. Many states have enacted similar laws. Some of those

laws have a more narrow definition than the federal; the most

notable is New York State.

The 30 Day Rule requires the seller to deliver the order within

a 30 day period, unless otherwise stated in the sales

literature. If the seller, for example, states in the order

form that delivery takes 4 to 6 weeks, he has effectively

insulated himself from the law. In a practical matter, however,

he may have also affected his business in a negative way.

The 30 day period begins when an order arrives and has been

properly paid for.

The 30 Day Rule is an easy regulation with which to comply. It

should rarely take longer than 30 days to fill an order. If it

does, the seller must notify the buyer of the delay and the

reason for it.

Some mail order companies delay shipment of orders until checks

rendered for payment have cleared. This should generally not

take longer than 10 days. If the seller wishes to follow such a

policy, he should so state in his literature. From the

perspective of a mail order operator, I do not consider this to

be a sound policy. NSF and ACCOUNT CLOSED checks are relatively

rare and can be minimized with proper controls. If you practice

such a policy, you may save a few dollars but in return you will

make customers unhappy. I personally do not buy from companies

that state in their literature that they hold checks for

clearance. Most mail order companies experience very small bad

debt ratios. It is recommended that you call the bank the check

is drawn on to verify funds on larger amounts; as for example,

on orders over $50.

Once the buyer has been notified that an order has been delayed,

the seller is automatically granted an additional 30 day delay

unless the customer advises the seller that the delay is not

acceptable. If he does not reply to the notification, it

constitutes legal acceptance of the delay. In general, and in

most states, the seller may obtain a second 30 day delay as long

as there is a good enough reason.

The New York law differs form the Federal law in that stipulates

a maximum period of 65 days (including delays) for an order to

be filled. Newcomers to the mail order field residing in New

York State should obtain a copy of the New York regulations.

The 30 Day Rule does not pertain to credit card sales. Credit

card charges should be processed when an order is filled. If a

mail order credit card sale is cancelled, the seller must issue

a credit against the account of the buyer within one billing

cycle following receipt of the cancellation request.

Unordered Merchandise

The Federal law pertaining to unordered merchandise is simple.

It strictly forbids this practice. Free samples, if so

identified, are exempted.

Merchandise Substitution

Most states, including New York, as well as the Federal law

permit sellers to substitute merchandise of similar or superior

quality. The law requires it, and it is also a good business

practice, to advise the buyer when making a substitution that he

may return the merchandise free of charge if he is not

satisfied. Certain items, such as merchandise which has

artistic value, cannot be substituted. In this regard, for

example, a book on how to start a given business may be

substituted by a similar book on the same subject, but a book of

literature by a renowned author may not be substituted.

Return of Merchandise

Unless the seller specifically states that he does not offer a

money back guarantee or offers, for example, a 30 day money back

guarantee, he is required to make a full refund for a period of

60 days if the material is returned in good condition.

My own experience with returned merchandise indicates that it is

quite rare. Our company, as an example, received no more than 1

to 2 returns for every 120 to 150 orders. If you are a seller

of information products and you sell reports or other

information which can be easily copied, you may wish to enact a

policy stating that there is a no return policy for reports, etc.

The above laws are the only Federal regulations pertaining to

the sale of merchandise which are unique to the mail order


Headliners in Advertising and Sales Literature

A few words should be said about the proper usage of some of the

most common headlines used in advertising. Again, for an

in-depth review of laws pertaining to advertising, refer to the

book as listed above.

The most common and most effective of these terms are: SALE,

NEW and most of all FREE. FREE is a magic word in American

advertising used by giant companies and small ones alike. By

all means, these terms should be used since they do produce

sales. And if the advertiser follows a simple rule of honesty

in the usage of these and other advertising terms, he will stay

out of trouble.


A sale is a reduction from the seller's own former selling price

of a given article. The seller must have sold, not just offered

the article, for a reasonable period of time. This simply means

if a 50% discount is offered on a $10 book, the book at some

previous time must have actually been sold at $10. If it just

has a cover price of $10 but was always sold at $7, a $5 price

is not a 50% discount.


Free means it is free. To re-emphasize, the term is very

successful and will generate sales. But if something is offered

for free, it should be free. The value of the free item cannot

be hidden in another part of the offer, such as charging more

for the other items than you would normally charge.


Here is another straight-forward terms. It should only be used

when new items are advertised. A new book is one which came out

in the last 6 months (maybe 12 months, and that would be

stretching it) but definitely not 2 years.

How to Start Your Own Company

Once you have decided you want to go into business, you must set

yourself up to get started. This is not at all difficult. You

should have no concerns on this matter. It is easy and

inexpensive to do. There are no unusual legal requirements to

sell by mail.

There are generally three ways to structure a business entity.

The sole proprietorship, the corporation, and a partnership.

The sole proprietorship is the easiest, fasted and least

expensive way to set yourself up. In most cases this would be

the way to start out for a small business.

Corporations have tax benefits that can be more advantageous

than a proprietorship, but they also have strict record keeping

requirements. As a rule of thumb, a business should be

incorporated if it has annual sales in excess of $250,000. It

is against the law in most states to use the abbreviation Inc.

unless the business is incorporated. But you can use Co.

Partnerships also have specific legal requirements. Forming a

partnership is generally necessary when going into business with

someone else. There are advantages and disadvantages in doing

this. Besides sharing workloads and profits, the partners must

get along well. It is almost always necessary to obtain legal

counsel in ordered to set up a corporation or a partnership.

D.B.A. and/or Business License

In most cities or towns it is required that a business license

be obtained. In addition, you generally need to register your

business name if you are using a fictitious name. If you are

using your own name, it is not required. Call you local city or

county clerk's office to obtain the necessary information.

A Summary of Copyright Laws

For those interested in becoming self publishers either by

creating their own work or using someone else's, here is a short

summary of copyright law.

What Copyright Is

Copyright is a form of protection provided by the laws of the

United States (Title 17, U.S. Code) to the authors of "original

works of authorship"' including literary, dramatic, musical,

artistic, and certain other intellectual works. Under the

copyright law, copyright protection (for printed works) pertains

only to the words and their sequence; it does not pertain to

any idea, process, system, etc., regardless of the form in

which is it described. That is, you copyright the words

contained in the copy, not the content. The copyright law

generally gives the owner the exclusive right to do and

authorize others to do the following: in the case of printed

works, to reproduce the work in various forms such as copying,

etc. It also gives the owner the right to display the

copyrighted work publicly.

Copyright Secured Automatically Upon Creation

The way copyright protection is secured under the present law is

frequently misunderstood. No publication or registration or

other action in the Copyright Office is required to secure a

copyright. There are, however, definite advantages in doing so

since, in the case of a litigation, it is substantially easier

to prove copyright if registration has taken place.

Under the present law, copyright is secured automatically when

the work is created, and work is "created" when it is fixed in a

copy for the first time.

Registration Procedures

Registration procedures are simple. In general, to register a

work, three elements have to be sent to the Copyright Office in

Washington, DC. An application (proper form can be obtained

from the Copyright Office), a $10 fee, and a nonreturnable

deposit of the work to be copyrighted. For more specific

information, including a copy of the law, write to:

Register of Copyrights, Copyright Office, Library of

Congress, Washington, DC 20559

U.S. Postal Laws

In general, it is against the postal regulations to utilize the

U.S. mail service to transport hazardous materials, pornographic

materials and chain letters involved money. For more specific

information, write to:

Consumer Advocate, U.S. Postal Service, 475 L'Enfant Plaza

West, W.W., Washington, DC 20260

You may also obtain a free copy of the Consumer's Resource

Handbook. It is designed to help consumers resolve complaints

about goods and services with local, federal and state agencies.

Write to:

Consumer Information Center, Department 532, Pueblo, CO 81009

Other free publications that may be of interest to you:

"Selling by Mail" can be obtained from:

Small Business Administration, Washington, DC 20416-1110

"The Mail Order Rule" can be obtained from:

Federal Trade Commission, Publishing Office, #130, 6th

and Pennsylvania Avenue, Washington, DC 20580-0001

A final thought: In the conduct of your business, let common

sense and honesty be your guide.

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