Facts for Business from the Federal Trade Commission

Buying by Phone -- April 1994

Buying by Phone -- April 1994

If you work at a small business or charity, you probably order some of your supplies by phone. Such business-to-business transactions are covered by the Federal Trade Commission's (FTC) Mail or Telephone Order Rule.

Mail or Telephone Order Rule

Under the Rule, companies are required to have a reasonable basis for being able to ship your order within the time promised in their advertisements or their solicitation for your order. If no time period is promised, the company must ship your order within 30 days after they receive it. The only exception to this 30-day requirement is if you are applying for credit to pay for your purchase. In that case, the company is allowed 50 days to ship. Whenever the company later learns it cannot ship in the time originally promised or 30 days, it must notify you of the shipping delay and give you the alternative of agreeing to the delay or canceling your order and receiving a prompt refund.

WATS-Line Hustlers

You probably find most telephone salespeople are honest and from reputable companies. Unfortunately, this is not always the case. The FTC has received complaints indicating that businesses and charities have problems with some telephone solicitors who use illegal tactics to make sales or who send unordered merchandise.

These solicitors often are called "WATS-line hustlers" because they operate using long-distance phone lines, such as Wide Area Telecommunication Service ("WATS- lines"), to sell to businesses and charities.

Even though most companies using long-distance phone lines do not engage in illegal practices, telephone sales schemes are increasing. This brochure describes how you can protect your business or organization from these illegal practices and what to do if you have a problem with a WATS-line hustler.

Typical WATS-Line Hustler Tactics

WATS-line hustlers target all kinds of businesses and charities, from restaurants, professional offices, and religious groups to schools and hospitals. They sell products that must be replaced continually, such as office supplies (pens, typewriter ribbons, copy machine ink, toner, etc.) and maintenance supplies (light bulbs, cleaning compounds, etc.).

While WATS-line hustlers use many different ploys, these are the common tactics:

They rarely deal with the authorized purchasing agent. WATS-line hustlers usually try to talk with an employee unfamiliar with purchasing procedures -- for example, an inexperienced clerk, secretary, or maintenance person.

They may mislead you to get orders. WATS-line hustlers usually mislead you into thinking that they are your regular supplier. For example, they may call pretending to conduct a "survey" of office equipment or to "update their records." Once you give them the information they want (perhaps the model numbers of your copying machines), they may pose as "your new supplier" or "authorized" dealer for whatever products you use.

They may pressure you into placing an immediate order. WATS-line hustlers may offer you "bargain prices" if you order right away -- but their prices may be no bargain. They often make up stories to explain why certain goods are available for a limited time at so-called low prices. For example, they may falsely claim that prices are going up tomorrow, that someone was forced out of business, that a warehouse is overstocked, or that a limited supply of government surplus is available. They may claim that, because of some computer foul-up, you were not notified of a recent price increase, so they have reserved an order for you at your regular or "old" price. These stories are designed to force you into making a quick purchase.

They may offer free gifts. WATS-line hustlers may offer to send a free gift to your home to induce you to place an order. Often the gift never arrives or is worth less than promised.

They may misrepresent merchandise. WATS-line hustlers may misrepresent the quality, type, package size, price, and brand name of their products. For example, contrary to what you believe, ribbons "for your I.B.M. typewriter" might not be I.B.M. brand ribbons, or toner "for your Xerox copier" might not be Xerox brand toner. Some hustlers even package their products to look like brand name products. Others will sell you a carton of toner at the price you normally pay, but their carton may contain only half as much toner as you normally get for that price.

They may call you over and over again. If you pay once for the goods they ship you, some hustlers will call again soon after, telling you that "the balance of your order" is ready for shipment. They will keep doing this as long as you continue to pay.

They may refuse to accept returned merchandise. If you complain about receiving misrepresented or unordered goods, WATS-line hustlers may try to get you to keep the shipment at a so-called discount price. They are usually reluctant to accept returned merchandise or pay for return shipments. To discourage you from returning merchandise, they may charge an exorbitant "restocking fee." To induce you to make a purchase, some may continue to send you partial shipments, which only increase the "bill."

Unordered Merchandise Problems

If you ever have unordered merchandise problems with WATS-line hustlers, you can deal with them more effectively if you understand your legal rights.

If you receive unordered merchandise, federal law, as interpreted by the FTC, says you may keep it as a free gift. The same law makes it illegal to send you bills or dunning notices for unordered merchandise, or to ask you to return unordered merchandise even if the seller offers to pay for your out-of-pocket shipping expenses. If, without your express agreement, the seller substitutes merchandise differing from the merchandise you ordered with respect to the brand name, type, quantity, size or quality, the substitute merchandise can be treated as unordered merchandise.

You also may refuse a shipment arriving by U.S. mail if you do not open it. Some private carriers provide return service as well.

To avoid misunderstandings with the company sending you such merchandise, contact them, preferably by certified letter with a return receipt requested.

If you are not certain whether you ordered goods, send the company a letter (preferably certified with a return receipt requested) and ask for proof of your order. If you are sure the merchandise was never ordered, write the company stating that you have a legal right to keep it as a free gift. Say you are sending a copy of your letter to the FTC -- and do so. Keep a copy for your records.

If you believe the sender made an honest mistake, you can offer to return the goods at the sender's expense. Of course, if a bona fide order was placed and you receive exactly what you ordered, you are responsible for paying the bill.

The point is: if you are billed for something you did not order or receive, always demand proof of your order and of delivery. Do not pay for any merchandise until you have proof of both. If you pay for something you did not order or receive, it may be hard to get your money back.

Precautions Against WATS-Line Hustlers

In addition to knowing your legal rights, you can protect yourself against WATS-line hustlers by making sure that you:

Ask the name of the company the caller represents. Never order goods by phone if you have doubts about the salesperson or company. If you are unfamiliar with the firm calling, ask for local references so you can check them out before you buy.

Use only authorized purchasing agents for ordering, receiving, and paying for supplies. Use written purchase orders whenever possible.

If you do order over the phone, make sure you understand the quantity you are ordering, and whether you will be getting a brand name or a generic product. Also, ask if there will be any added charges (e.g., shipping, handling, etc.) and exactly how much they will be.

Inform all employees about your organization's purchasing, receiving, and paying systems.

Never accept or pay for shipments without being sure they were authorized. Examine both the invoice and the merchandise carefully before you pay.

Where to Complain

If you have any problems with a purchase made by phone or with WATS-line hustlers, first try to resolve your dispute with the company. If the problem is not readily corrected, contact your local Better Business Bureau or state consumer protection office for assistance.

You also can contact the Federal Trade Commission. Although it cannot resolve individual disputes, the Commission wants to know if you have had trouble with WATS-line hustlers. The Commission can take action if there is evidence of a pattern of deceptive or unfair practices. Send your complaint to: Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580.

To learn more about the Mail or Telephone Order Rule, request the free brochure, Shopping by Phone or Mail. Contact: Public Reference, Federal Trade Commission, Washington, D.C. 20580; (202) 326-2222. TDD: (202) 326-2502. You also may contact Public Reference to receive a free copy of Best Sellers -- a listing of the FTC's consumer and business publications.


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