Buying online? This is what to beware of

Buying online has become so convenient for South African consumers that many people are doing their Christmas shopping online. However, the internet is also a place where scammers hide in plain sight and you have to beware when you shop online to ensure you do not pay your hard-earned money for something that will never be delivered.

Lee Soobrathi, the Consumer Goods and Services Ombudsman, says that judging by his office’s complaints over the past three years, online shopping is fraught with pitfalls that can snare even the most vigilant and tech-savvy consumers.

While his office routinely shares tips on what consumers can do to avoid unpleasant and potentially disastrous online shopping experiences, he says what is less well known, however, are the obligations that suppliers have to protect their online customers.

Soobrathi points out that online transactions in South Africa are governed by the Electronic Communications and Transactions Act which clearly states the basic minimum information that vendors are compelled to provide to consumers by law.

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Requirements for online sellers

Online sellers must:

• display correct pricing (where there is an error, it must be communicated to consumers and be corrected within a reasonable time, otherwise, consumers are entitled to purchase at the displayed price
• provide a detailed description of the goods or services to avoid consumers ordering goods that are not fit for purpose
• display delivery times and communicate delays to consumers
• disclose key terms and conditions, including return and refunds, timeframes and channels
• display contact details and escalation processes if consumers have any queries
• avoid bait marketing or overselling by ensuring that there is sufficient stock or indicating stock limitations in all advertisements where applicable
• avoid accepting monies from consumers if there is no stock or capacity to deliver the goods or services at the agreed time and date
• disclose any other additional costs that the consumer would incur, including any delivery costs or cancellation penalties and
• provide a system for consumers to track their deliveries.

“While this is straightforward for legitimate vendors selling items on their e-commerce platforms, it gets trickier when contracting with online marketplaces, because many well-known online marketplaces host less well-known high-volume third-party sellers who could be based anywhere in the world,” he warns.

Most consumers are unaware of this until things go wrong, invariably around the delivery, refund or return process, Soobrathi says.

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Protection in US and EU when buying online

“At that point, the unwitting consumer will be referred to the third-party seller. If the third-party seller ghosts the customer, there is very little redress available to you. This is a problem globally so much so that in June this year, the US Congress passed the Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act), compelling online marketplaces to:

• collect bank account information,
• contact details and Tax ID for high-volume third-party sellers
• verify the details
• disclose those details in the event of a dispute and
• in the event of non-compliance, suspend the third-party seller.

Marketplaces are also now obliged to provide a simple mechanism for consumers to report suspicious conduct.

The EU also put similar provisions in place to protect EU consumers online, specifically when it comes to information that must be disclosed about third-party sellers and the removal of sites or social media accounts where scams have been identified. They have also made it possible to request information from internet service providers or banks to trace the identity of rogue online traders, Soobrathi says.

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Protection in South Africa when buying online

“In South Africa, the Act is clear about the marketplaces’ obligations in this regard: consumers must be made aware in clear and upfront terms if they are not transacting with the marketplace and what recourse they will have in the event they are unhappy with the goods or services.”

The Consumer Protection Act also provides extensive protection for consumers regarding the disclosure and accuracy of information about goods and services advertised or goods delivered that may be inconsistent with the consumer’s expectations.

Soobrathi says when it comes to fraud and the methods used to trap or defraud consumers, banks and payment platforms such as PayPal will often step up and try to assist clients as far as possible to get their money back.

“It is very important that consumers understand their rights and obligations when transacting online, especially with vendors that they have not bought from previously. While the Consumer Protection Act provides for an ‘implied warranty’ in terms of section 56, consumers must be mindful that the terms and conditions relating to ‘change of mind’ returns are subject to the store policy governing these returns

“While some vendors allow for returns, other vendors will make it clear that there is no return policy, especially on goods that are either marked down or the last of their kind.”

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Beware when you buy from eGadgets.co.za

The ombudsman’s office issued an alert against eGadgets.co.za, an online retailer selling electronic goods, for failure to deliver goods online shoppers bought and paid for. Of the 32 consumer complaints lodged with the ombud’s office against eGadgets in the last 12 months, only 11 were successfully resolved.

Soobrathi says that the supplier ceased to cooperate with his office, resulting in the office having to close 17 unresolved cases and referring the consumers to open new cases with the regulator, despite numerous attempts by the office to engage with eGadgets to resolve the complaints.

“When a supplier refuses to cooperate, the office issues a Termination Notice, effectively closing the case, so that consumers can escalate their concerns to the National Consumer Commission (NCC) which has powers of investigation and sanction, that we, as a mediation body, do not have,” he says.

According to Soobrathi, eGadgets consistently failed to fulfill customer orders within the stipulated timeframes, despite promising to do so. More seriously, he says, is the supplier’s refusal to refund consumers who, having given up on their order ever arriving, attempted to cancel their orders.

“This is a flagrant contravention of the Consumer Protection Act. Section 19 provides that a supplier must refund a consumer if they are unable to deliver the agreed goods or services on the agreed date or time and both parties have agreed no alternative arrangements.”

The Act also prohibits conduct relating to false, misleading, or deceptive representations regarding the availability or delivery of goods or the performance of services at a specified time, he points out.

Soobrathi warns consumers to exercise caution when making online purchases and urges shoppers to do their homework first. “A quick search on Hellopeter shows 68 reviews for eGadgets, of which 56 are resoundingly negative (one star) with only 10 positive reviews. This should be a big red flag to consumers.”