Records Retention

What records do I need to keep?

If a seller does not have records or documentary proof that it used systems and procedures to detail the shipment of merchandise in the ordinary course of business, the seller is presumed to have lacked a reasonable basis to believe that it could ship merchandise to a specific consumer within the time stated, or 30 days. This means that the Federal Trade Commission only needs to claim that a seller did not have a reasonable basis for making the shipment representation and thus violated the Mail Order Rule. The seller can rebut the presumption by proving otherwise. Also, where the Federal Trade Commission alleges that the seller did not give the buyer an appropriate delay option notice or did not properly cancel and/or refund a buyer’s money, the seller’s failure to keep records of its use of systems and procedures to assure compliance with any of these requirements creates a rebuttable presumption that the seller failed to comply.

According to the Federal Trade Commission, the seller should have a record-keeping system with documentation that provides answers to questions regarding how demand is anticipated, how inventory is monitored, and how demand needs are dealt with. If sellers, as in the case of many online retailers, use third-party fulfillment systems, outsourcing their delivery, order processing, and/or warehousing needs, their records should show how the fulfillment system is designed to meet the requirements of the Rule, including whether the delay option notices sent are in compliance with the rule. Records also should demonstrate the promptness of a refund in the event of cancellation. And adequate records should be kept for each individual order showing the date the order was received, when any delay option notices were sent and what such notice entailed, when a cancellation was received, when an order was shipped and what items were included, and when a refund was made and for what merchandise.

In addition to providing an evidentiary trail of the seller’s actions, a good record keeping system could directly help a seller comply with delay notice and refund obligations. Such system could incorporate timing devices to automatically prepare the necessary delay option notices and tell the seller when to refund the consumer. Additionally, an online form could be used to make it easy for the buyer to cancel his order in the event of an unwanted delayed shipment and give the seller a record of such cancellation.