FTC fines e-tailers $1.5 million for shipping delays
Seven Internet retailers agree to pay a total of $1.5 million in fines stemming from charges by the Federal Trade Commission involving shipping delays last holiday season.
The online stores, which include major retailers Toysrus.com, Macys.com, CDNow and KBkids.com, were charged with violating the FTC's rules for mail and telephone orders.
As part of an investigation dubbed Project TooLate.com, the FTC alleges that the online stores did not give shoppers enough notice of impending shipping delays or that they continued to promise deliveries they could not make during the holiday season.
As part of the settlement, the retailers have agreed to change their procedures.
"Although there are still 151 shopping days until Christmas, today's announcement is an early gift for Internet shoppers," Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, said in a statement.
"Last December, a large number of e-commerce buyers didn't get the type of notice of late shipment the law requires and were misled about delivery dates. Many retailers ended up looking more like Scrooge than Santa."
Bernstein also said the action shows the FTC is equally serious about enforcing the rules for online and offline retailers.
As part of the settlements, Macys.com must pay $350,000 in fines and fund a consumer education campaign online about the mail-order rule. KBkids.com and Toysrus.com were also fined $350,000 each, and CDNow must pay $300,000.
CDNow's penalty amount will be waived except for $100,000 because of its poor financial condition.
Other retailers involved included Patriot Computers, which was fined $200,000, and the Original Honey Baked Ham Company of Georgia, which must pay $45,000.
In addition, Minidiscnow.com, which is no longer in operation, must fully reimburse each consumer who ordered but did not receive the company's products.
The investigation was prompted by consumer complaints last Christmas that online stores were not meeting express delivery deadlines. The FTC's rule requires that if retailers cannot meet stated deadlines, they must issue a notice to consumers so that they can decide whether they want to cancel the order.