Wednesday, 25 September 2013

MAIL ORDER LAWS AND REGULATIONS


An Overview





Introduction





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



industry.





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.





Sale





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





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.





New





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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