I shop online a lot. Probably too much, to be honest. And sometimes, the item I want is out of stock or on backorder. When an item is out of stock, a retailer often gives you the option to sign up for notifications for when the item will be back in stock. When an item is on backorder (meaning that it’s not available now, but will be soon), a retailer may still let you order the item.
When it comes to payment, there are two options. The retailer can take your money now or they can charge you when the item is back in stock and ships to you.
However, did you know that the FTC says that a retailer can’t hold your money for more than 30 days? That’s right, if an item is on backorder and won’t ship for more than 30 days, the retailer can’t take your money. If they plan for an item to be available in 15 days and that 15 days turns into 45, they are required to contact you for permission to continue to hold your money, and if they don’t get that permission, they must refund you immediately.
You can read more about the rule here:
The Rule requires that when you advertise merchandise, you must have a reasonable basis for stating or implying that you can ship within a certain time. If you make no shipment statement, you must have a reasonable basis for believing that you can ship within 30 days. That is why direct marketers sometimes call this the “30-day Rule.”
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. If you cannot obtain the customer’s consent to the delay — either because it is not a situation in which you are permitted to treat the customer’s silence as consent and the customer has not expressly consented to the delay, or because the customer has expressly refused to consent — you must, without being asked, promptly refund all the money the customer paid you for the unshipped merchandise.
Guess Who Isn’t Following the 30-Day Rule?
LuLaRoe is currently sending partial shipments to their consultants, notifying them that some of their items are placed on backorder. If items can’t ship right away, the consultant is notified, and then in 7 days, if the item is still unavailable LuLaRoe will give the consultant a credit in Build, the LuLaRoe financial system.
This sounds like a decent deal, right? The consultants get their money back in 7 days right?
The consultants aren’t getting their money back. LuLaRoe still has their money. They just have a credit to order more product. Depending on the size of this missing order, this could be a large amount of money that LuLaRoe is holding on behalf of the consultant. And if the consultant doesn’t want to order anything else right away, they are out both cash and product to sell.
From LuLaRoe’s point of view, they have just convinced the consultants to spend the money on different product, even though it’s not what they wanted at first.
A lot of LuLaRoe consultants don’t have a lot of cash to work with to begin with. They often start their business by getting a credit card with a zero percent interest introductory period. LuLaRoe holding on to their money ends up costing them money.
Unfortunately, a lot of LuLaRoe consultants are so used to bad behavior from the headquarters that they see this as a positive thing. After all, they will be able to easily track their product and credits. However, this doesn’t mean that LuLaRoe is in the right. They are, in fact, violating FTC rules in just another example of why LuLaRoe is a bad company to do business with.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.