As online shopping grows, so do the complaints

The Consumer Goods and Services Ombud has called for tighter e-commerce controls as online shopping continues to grow along with complaints. The ombud is especially concerned about the trend where online marketplaces sell goods from third parties, but do not accept any responsibility.

Before the pandemic, complaints about online shopping were negligible and constituted less than 5% of complaints the ombud received. This quickly changed after the lockdown restrictions were introduced in March 2020 and from then until February this year, the ombud received 6 636 online complaints.

The ombud says these complaints were driven by a fundamental shift in consumer behaviour toward online shopping and the rush by suppliers to create online trading platforms.

Online shopping in South Africa exceeded R50 billion in 2022, signalling that this way of remote shopping is not slowing down, according to research done by World Wide Worx and Mastercard last year.

The study indicated that the total growth for online retail in South Africa in 2022 came to 35%, bringing the total of online retail in South Africa to R55 billion, after 40% growth the previous year took the total to R42.3 billion in 2021, 4% of the R1.166-trillion total, marking healthy growth from the 2.8% recorded in 2020.

An analysis of the complaints the ombudsman received showed a trend that raises some concerns, especially when it comes to online platforms that also act as marketplaces, where platforms invite third-party sellers to advertise and offer goods and services to the marketplace’s customers.

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Third party in e-commerce

Third-party sellers that use an established marketplace’s virtual presence agree to a standard set of terms and conditions, including service terms relating to the marketplace provider selling their products to customers. These include fulfilment services, which entail the supply of the goods as per description and quality.

However, the ombud says, consumers are often only aware that they are dealing with a third party when something goes wrong and the marketplace directs them to the actual seller, who is ultimately responsible for product descriptions, returns and refunds.

The ombud points out that intermediaries, such as these marketplaces, have certain responsibilities when it comes to consumer protection in terms of the Consumer Protection Act (CPA) and the Electronic Communications and Transactions Act (ECTA).

“Both these acts have detailed disclosure requirements aimed at ensuring that consumers know who they are dealing with and what to do when they are not happy with the goods or services. More importantly, the disclosures must be provided prominently in clear, plain language to allow the consumer to decide whether to contract with the intermediary or make an alternative consumer choice.”

The ombud says virtual marketplace providers also have a responsibility to ensure that only legitimate and compliant third-party suppliers are allowed to trade on their platforms and to remove them from the platform for transgressing consumer rights. This includes ensuring that third-party suppliers subscribe to the industry Code of Conduct.

However, the ombud points out, despite being governed by the CPA and ECTA, there are not enough agencies monitoring and taking down transgressors in e-commerce.

“In South Africa, anyone can create websites and trade without oversight. As a result, scams are rife and the ombud has its work cut out for it to warn consumers of rogue operators and educate consumers on the need to do their homework before engaging with online sellers.”

The ombud says therefore more work needs to be done at the policy, industry and consumer levels, especially regarding cross-border trade where e-commerce is concerned.

“Online companies operating outside of South Africa rarely respond when we refer complaints to them and many do not comply with local laws. This is an urgent issue that requires the attention of regulators and legislators.”

The ombud issued four alerts over the past year warning consumers to exercise extreme caution when trading with:

• PC Link;
• Online at Liepies;
• Sassy Heels;
• Reliable Store.