Shipping Rules and Regulations Your Small Business Might be Violating

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  • May 9, 2019
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  • The FTC rule for mail, internet or telephone order of merchandise requires sellers to have a reasonable, advertised time frame during which time a product will be sent. If no time frame is specified, the expectation is within 30 days.
  • Make sure your shipping carrier has a clause built into its contracts that specifies a refund policy for late deliveries. And follow your carrier’s rules for packaging materials, size and weight.
  • International shipping rules break down into five types: commodity-related requirements, trade controls, sanctions and red flags, transportation of hazardous or illegal goods, and partner government agencies or other government agencies.

Retailers and e-commerce businesses are certain to ship goods through the mail frequently. For those businesses, it’s easy to forget about rules and regulations. Most small business owners would rather think about improving their products and catering to customer desires than worry about rules and regulations. While it’s far from glamorous, small businesses need to be aware of shipping rules and regulations.

There are two key reasons businesses need to understand shipping regulations. First, businesses can benefit financially from a thorough understanding of shipping regulations. Second, businesses can face fines and legal repercussions if they violate shipping regulations. They’re not sexy, but shipping regulations can alter your bottom line.

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A major shipping regulation worth noting

Your business should be aware of all major shipping regulations in your area, as well as any local restrictions that may be in place, but there is one major shipping regulation that stands out above the rest, as it’s an easy one for small businesses to overlook.

The FTC’s mail, internet or telephone order merchandise rule

“The main regulation that I see small businesses violating is the FTC’s mail or telephone order merchandise rule (the “30-Day Rule”),” said Braden Perry, a litigation, regulatory and government investigations attorney with Kennyhertz Perry LLC. “The rule prohibits sellers from soliciting mail, internet or telephone order sales unless they have a reasonable basis to expect that they can ship the ordered merchandise within the time stated on the solicitation, or, if no time is stated, within 30 days.”

In simpler terms, any business that sells goods via mail, the internet, fax or telephone needs to clearly state when the product will be shipped to the customer. If the timeframe isn’t specified, the business needs to ship the item within 30 days. According to the FTC’s website, “If, after taking the customer’s order, you learn that you cannot ship within the time you stated or within 30 days, you must seek the customer’s consent to the delayed shipment.” [Interested in postage meters for your small business? Check out our guide for small businesses.]

If the customer does not consent to the delay, you owe the customer a full refund. This rule protects customers from businesses lying about shipping dates, never shipping products and keeping a customer’s money. It’s a sensible rule, and one that many small businesses might not be aware of.

To understand the FTC’s mail, internet or telephone order merchandise rule, you have to look deeper than the initial error of not shipping the product within the specified time period. Failing to ship an item within a specified time frame doesn’t violate the FTC’s rule, it’s failing to adequately respond with a new shipping date and refund options that gets businesses in trouble. Knowing you are close to violating the rule is the first step, but if you don’t properly proceed after failing to ship within your specified time frame, you can compound the error.

“Violations of the 30-Day Rule can be severe,” Perry said.

According to the FTC’s website, “Merchants who violate the Rule can be sued by the FTC for injunctive relief, monetary civil penalties of up to $42,530 per violation (any time during the five years preceding the filing of the complaint), and consumer redress (any time during the three years preceding the filing of the complaint).”

Once you realize you won’t be able to ship within 30 days or the specified time frame, it’s time to act. The FTC’s website outlines a handful of different scenarios and actions your business should take to remain compliant. The FTC provides numerous hypothetical responses you can send to customers when you’re unable to ship within 30 days. There are details outlining when you’re required to send a refund and the time frame in which the refund is due. There’s a lot to go through, but it’s important to follow the details of the law.

If you don’t violate the rule and you do ship within 30 days, there’s not too much to worry about regarding this FTC legislation. Unfortunately, it’s a detailed rule that many small businesses or even tiny home-based businesses forget about or aren’t even aware of. For small businesses shipping products, this rule is critical. You don’t want to lose thousands of dollars by being uninformed. Take the time to peruse the FTC’s detailed explanation of the rule to ensure you don’t throw money away by violating federal regulations.

Cut shipping costs by understanding small business shipping regulations

While your business can easily lose money by failing to follow the FTC’s mail, internet or telephone order merchandise rule, it can also utilize shipping regulations and contracts to reduce shipping costs. For e-commerce sellers, there’s always going to be a focus on lowering shipping costs. If you’re using a major organization to help ship your goods, make sure you know their policies about late deliveries.

“One important rule to consider is in the guarantee that shipping carriers include in their contract with businesses,” said Matt Lessard, manager at Buster Fetcher. “UPS, FedEx, USPS, Canada Post and most shipping carriers include in their contract a reimbursement policy for when packages are delivered late.”

Even though you always hope your packages are delivered to customers on time, your business should take advantage of the refund options available when those packages aren’t delivered in a timely manner. Prioritizing shipping also means paying attention to delivery policies. Just knowing your shipping agreement can save you money if something goes wrong.

You’ll want to be aware of the different shipping options that companies offer. Is there going to be an extra cost for priority mail? Will using priority mail help you avoid the fines or punishment associated with shipping delays or late deliveries? Make sure you know what companies offer.

When using major companies like FedEx or UPS, follow their small business rules and regulations. This includes the pricing on different weighted products. Make sure you’re aware of how much it will cost to ship your products and make any necessary adjustments if certain products weigh more or less than originally anticipated. Understand the rules surrounding packaging. Do you need to use a certain type of packaging with certain products? Make sure you understand all the tiny details associated with shipping. This helps when you’re budgeting shipping costs.

If there are any regulations or rules that you find particularly confusing, reach out to the company you’re working with or someone with knowledge of different shipping regulations. In extreme cases, this can be a lawyer. Other times, this may just be employees at your local post office. Postal service employees should have a deeper understanding of international and domestic shipping regulations than most small business owners. They will also help you better estimate shipping costs and any additional shipping charges or packaging requirements that might not be obvious.

Other small business shipping rules to monitor

Businesses shipping internationally need to take an additional step to monitor international regulations. If you’re working with a major shipping company like FedEx or UPS, they can make the process easier since they have years of experience with international shipping.

The regulations for international shipments vary by country, so it’s important to check the guidelines for the countries you’re shipping to. That’s where speaking with a shipping expert or working with a major company makes the process a bit easier, as they tend to handle most of the details.

We also spoke with Corey Bonasorte, vice president of compliance and cargo solutions at Access USA Shipping LLC. Bonasorte recommends breaking the regulations and requirements down into five categories.

  • Commodity-related requirements

    • “U.S. Customs and Border Protection has overarching responsibility for cross-border trade,” Bonasorte said. “Normally we think of CBP as just being responsible for imports in the U.S., but they are also responsible for all outbound movements as well – they own the nexus at the border.”
  • Trade controls

    • “Everything has a control of some kind, be that a smartphone or advanced avionics,” Bonasorte said. “The level of control all depends on what the product is, who regulates it, where it is going, who will be using it, and how they will be using it.”
  • Sanctions and red flags, or know your customers’ policies

    • “Whom you do business with is just as important as what you are selling,” Bonasorte said. “Most regulators maintain lists of debarred or sanctioned entities (people or companies) and countries that you cannot do business with unless that regulator preapproves the transaction. The biggest of these regulators is the Office of Foreign Assets Control.”
  • Transportation

    • “Certain items, depending on their chemical makeup, are considered hazardous for transportation (internationally this is referred to as “dangerous goods”), because if released, they can cause harm to people, property or the environment,” Bonasorte said. “This is an area where the types of products and levels of hazards vary greatly. Something as seemingly innocuous as hand sanitizer needs to be properly packaged, labeled and marked, because the alcohol in the sanitizer is flammable.”
  • Partner Government Agencies (PGAs) and Other Government Agencies (OGAs)

    • “Some examples of PGAs are the Food and Drug Administration, U.S. Fish and Wildlife, the Alcohol and Tobacco Tax and Trade Bureau, and the Environmental Protection Agency,” Bonasorte said.

Bonasorte admitted that the sheer volume of regulations and government agencies can be difficult to track. Breaking down different laws and regulations into separate categories, like Bonasorte recommended, can be helpful. A logical breakdown of the rules will make them easier to remember and follow. Using common sense is important as well. If you’re mailing or transporting goods that might be considered hazardous materials, you’re going to want to research hazardous materials regulations.

Additionally, it’s important to learn about the different rules that you think might affect your business at some point or another. If you don’t ship internationally, don’t waste time scavenging through dozens of documents explaining international shipping law. Taking a few hours to familiarize yourself (and your team) with relevant small business shipping rules is a much better alternative than losing thousands of dollars due to shipping infractions.

How to learn about shipping regulations

“Companies can be understandably intimidated with this subject and its complexities,” said Bonasorte. “However, if they put forth a good effort to learn what they need to comply with, train their folks, have someone be responsible for compliance with support from the top down, create written policies, and take it one step and a time, they can navigate the requirements. There is a lot of help out there, too, both from industry and the regulators themselves.”

Learning about shipping regulations can take some time, but speaking with experts and reading up on legislation makes it an easier process. If you have questions about the postal service, priority mail, shipping fees, bubble wrap, sales tax or anything in between, there are experts who can help you understand everything you need to know about shipping rules and regulations. Bonasorte recommends visiting government websites and other official sites – these are good starting places when familiarizing yourself in greater detail with shipping and fulfillment practices.

Export.gov is a good starting point as it links to a number of different places and has a lot of resources,” said Bonasorte. “Also, each of the regulators has their own website, which often includes training webinars, seminars, FAQs, the regulations themselves and other information, like public opinions or previous written correspondence from the agency that has been made public. There are also a number of different associations that put on conferences and in-person training sessions.”

If you’re afraid you’re violating shipping regulations domestically or abroad, it’s worth speaking with an expert or signing up for a training. Violating small business shipping regulations you don’t even know about can cost your business thousands of dollars. Avoid potential fines by being proactive and learning more about shipping rules and regulations that might affect your business. Create a shipping strategy instead of hoping for the best.



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