Hunton Retail Law Resource

The Federal Trade Commission announced a penalty against online sneaker retailer GOAT for failing to honor its “Instant” and “Next Day” shipping guarantees. According to the FTC’s complaint, GOAT also violated its “Assurance of Authenticity” and “Buyer Protection” promises, rejecting or only partially crediting customers for defective products.

GOAT operates a secondary marketplace in sneakers and apparel at www.goat.com. GOAT advertises that the products sold in the marketplace are put through the company’s verification process before they are shipped to buyers, claiming that “if a purchased item does not ultimately meet our standards, we can offer you support through our Buyer Protection Policy” and that GOAT will follow up with consumers within 1-2 business days after a complaint about product quality is made. The FTC alleges that in practice, however, GOAT had no system in place to identify or prioritize customer service requests related to deficient products and GOAT rejected return requests when they were not made in a timely fashion or because the items were “used.”

The FTC’s complaint highlights additional problems with GOAT’s product return practices including that:

• The company often took an “unreasonable” amount of time – days or weeks – to address return requests;
• GOAT held back shipping costs, charged customers to ship back their items, and then, offered only store credit for returns;
• GOAT does not have a telephone line for customer service inquiries and requests, nor does it have a live chat function;
• GOAT’s automated assist function was incomplete and could not offer seamless customer relief.

The FTC also found fault with GOAT’s order processing and shipping practices. GOAT offered three forms of shipment speed: Ship to Verify, Instant (Standard), and Instant (Next Day). According to the FTC, GOAT shipped 37% of all “Instant” orders later than it promised and shipped more than 16% of all “Next Day” orders on the second day or later after the order, “despite the buyers paying $14.50 to $25 in shipping upgrade charges.” Such delays violate the federal Mail, Internet, or Telephone Order Rule (“Mail Order Rule”), which requires a reasonable basis for shipping promises and a means to consent to delays or cancel orders for a prompt refund.

The FTC’s settlement order requires GOAT to pay $2,013,527 to refund consumers. GOAT also is prohibited from misrepresenting the relief it will provide to consumers who receive deficient products and must implement certain easy-to-use customer service practices and easy-to-obtain refunds. GOAT must also comply with the Mail Order Rule going forward.

It has been a while since we’ve seen a Mail Order case out of the FTC. This action serves as a reminder that overpromising and underdelivering (quite literally) can be costly and complicated.