Direct Marketing Association Issues Guidance For Establishing And Substantiating Shipping And Handling Charges

SAN FRANCISCO, June 2, 2003 -- The Direct Marketing Association (The DMA) today issued guidance to assist catalogers and other direct marketers in establishing charges for shipping, handling, and other fulfillment costs.

The Guidance for Establishing and Substantiating Shipping and Handling Charges was released today at the 20th Annual Catalog Conference & Exhibition in San Francisco.

"In a marketplace of sophisticated consumers and close scrutiny by regulators, direct marketers must be very careful. Positive consumer perception of all charges, especially shipping and handling, is critical to the continued success and growth of the industry," said H. Robert Wientzen, president & CEO, The DMA.

"In short, shipping and handling costs should be fair, reasonable, clear, and justifiable," said Wientzen.

The guidance provides additional direction beyond article #11 of The DMA's Guidelines for Ethical Business Practice, which states: "Postage, shipping, or handling charges, if any, should bear a reasonable relationship to actual costs incurred."

The guidance recommends that companies do the following when establishing and substantiating shipping and handling charges:

Companies should determine what costs will be covered, and substantiate their method so they can easily respond to consumers, regulators, or others who might inquire about charges. Ideally, a fulfillment cost study should be done with the assistance of an impartial outside expert. While most consumers understand paying for direct costs such as common carrier or delivery charges, semi-direct costs such as warehousing and returns processing or indirect costs such as item replacement costs are much more difficult to substantiate and should be clearly documented.

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Exact charges should be disclosed clearly and conspicuously in advance of the order. In catalogs and direct mail, charges should be prominently displayed and readily visible. When ordering online, shoppers should receive shipping information early in the order path.

In continuity programs, in which shipping costs may differ from month-to-month depending on the order, marketers should provide an estimated range of costs before consumers sign up. When each order is shipped, the exact shipping and handling charge should be clearly stated.

If a company eliminates a separate shipping and handling charge and concurrently builds the cost into the price of the product, the offer should include a term such as "shipping included" rather than "free" shipping.

When a company offers free products and the consumer pays only for shipping and handling, the offer should disclose very clearly and close to the word "free" the costs of shipping, the entire plan for which the consumer is obligated and the total cost that consumers will pay.

To assist companies in understanding the new guidance and to address other issues regarding shipping and handling charges, The DMA will sponsor a seminar via conference call on Thursday, July 17, 2003 from 2 to 4 p.m. ET. The seminar will be conducted by George Isaacson of Brann & Isaacson, who consulted with The DMA in developing this new guidance. The cost for the seminar is $99 for DMA members and $150 for non-members. To register for the call-in seminar, e-mail The DMA's Ethics and Consumer Affairs Department at ethics@the-dma.org.

The complete text of the Guidance for Establishing and Substantiating Shipping and Handling Charges is available on The DMA Web site at www.the-dma.org.

The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers, and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States surpassed $2 trillion in 2002, including $126 billion in catalog sales and $34 billion in sales generated by the Internet. The DMA's Web site is www.the-dma.org, and its consumer Web site is www.shopthenet.org.

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