Online Retailers Settle Charges for Slow Holiday Delivery

W A S H I N G T O N, July 27 -- Seven Internet retailers, including the Website of Macy’s department store, will pay a total of $1.5 millionto settle charges they did not adequately warn customers aboutshipping delays during the holiday season, the Federal TradeCommission said Wednesday.

“Last December, a large number of e-commerce buyers didn’t getthe type of notice of late shipment which the law requires and weremisled about delivery dates,” said Jodie Bernstein, director ofthe FTC’s Consumer Protection Division. “Many retailers ended uplooking more like Scrooge than Santa.”

After an investigation prompted by consumer complaints, the FTCalleged that the companies, CDNow Inc., KBkids.com LLC, Macys.comInc., Minidiscnow.com, The Original Honey Baked Ham Company ofGeorgia Inc., Patriot Computer Corp. and Toysrus.com Inc. failed tomeet their delivery promises.

Paying for Delays

The Mail and Telephone Order Rule requires that retailers shipgoods within the date promised, or if no date is promised, within30 days of the order’s receipt. If the company cannot ship aspromised, it is required to provide notice to the buyer with arevised shipping date, giving the buyer the opportunity to agree tothe delay or to cancel the order.

The FTC alleged that all of the companies failed to give thebuyers a chance to cancel the order when it was delayed, and insome instances, all but one company sent no delay notices at all.

As part of the consent agreement, which does not constitute anadmission of guilt, all of the companies were fined between $45,000and $350,000, with Macys.com, KBkids.com and Toysrus.com receivingthe stiffest monetary penalties. Macys.com will also have to fundan online education campaign about consumer rights.

CDNow’s penalty, levied at $300,000, was reduced to $100,000 dueto the company’s poor financial condition. German multimedia giantBertelsmann AG announced last week that it is buying the troubledmusic retailer at $117 million — an 80 percent markdown fromCDNow’s value in its 1998 initial public offering.