With Christmas fast approaching, we thought it a good time to look at what online shoppers should be wary of when purchasing online. We may have the best laws around, but if you are unaware of them, then it really is a case of Caveat Emptor.

Know Your Rights

It is important to know at least a little about the two pieces of legislation that cover online shoppers. The first is the Sale of Goods Act 1979, the other is the Distance Selling Regulations 2000. In both instances it is not possible for a company’s terms and conditions to remove the rights bestowed on consumers by these two laws.

The majority of the time shoppers won’t need the protection of these pieces of legislation, generally most of us order an item from one of the big retailers, it arrives, and then all is good with the world. But the old adage of a true test of a company being when things go round has never been truer, especially this time of year.

So what happens when things go wrong? The DVD you ordered doesn’t arrive, doesn’t play or they sent you the wrong one?

Returns

Returns are one of the most important things to look for when shopping online. The Distance Selling Regulations allow you to return goods purchased online at no cost, as long as you inform the retailer within seven days that you wish to do this. Therefore one of the first things you should do before shopping with a company is find out about their returns policy.

Some companies, like Amazon make it easy for you to return items, even supplying you with a returns sticker on your invoice. Others will supply a returns address on their website, or offer a returns option in your account with them. Still others, like HMV, will make it as difficult as possible to return certain items, such as games, by hiding not only the returns address, but also the information required to contact the returns department.

For such a huge retailer HMV has a bizarre policy on returning games, specifying that you contact the Online Service Team before returning a game to them. Sounds simple, but there is no email address or contact information anywhere on the website for the Online Service Team, giving the option of emailing at random some of the other addresses supplied and hoping that it gets passed onto the relevant department and that someone gets back to you, or calling and going through a call centre.

Returns are unpleasant and generally a hassle, especially if it is for a Christmas present, so you will want to ensure that a company’s returns policy is as clear and as simple as possible before buying. You do not want to spend the few weeks before Christmas waiting for a company to get back to you, so that you can return an item to them, and then wait even longer for a refund.

Restocking Fee

Some companies try and deter returns not by hiding their return information, but by charging a restocking fee. If you are returning an item to a company and have informed them of this within seven days of receiving it, their charging you a restocking fee is ILLEGAL. Under the Distance Selling Regulations a restocking fee, administrations charge or any other fee made against a consumer for returning an item is illegal:

Distance Selling Regulations 2000

If you want the consumer to return the goods and to pay for that return, you must make it clear in the contract and as part of the required written information – see paragraph 3.10. If the consumer then fails to return the goods, or sends them at your expense, you can charge them the direct cost to you of the return, even if you have already refunded the consumer’s money. You are not allowed to make any further charges, such as a restocking charge or an administration charge.

That doesn’t stop companies from doing it however. Memorybits for example charge an illegal 10% restocking fee for goods returned, as well as refusing to offer a refund for opened items, again illegal under the Distance Selling Regulations which give you the right to inspect products, which of course means opening them (DVDs, CDs and software are unfortunately exempt from this). How do companies get away with it?

In the case of Memorybits, they are based in Jersey and so it is a legal gray area as to whether the law fully applies there, as it does the rest of the UK. Others though are able to get away with it because their customers are hoodwinked into believing that because it is the company’s terms and conditions, they do not have a leg to stand on. This isn’t the case, hence why many have the phrase ‘This does not affect your statutory rights‘.

Even with the law on your side however getting your restocking fee back can be a real hassle. The best thing to do is to report the company to trading standards and hope that this forces them to return your money. If not, that just leaves the small claims courts and although it is a clear cut case, the small amounts involved make it unlikely to be worth the hassle.

Your best option is to avoid companies like Memorybits in the first place.

Faulty Products

It is a different kettle of fish with faulty or incorrect products, here you are covered by the Sale Of Goods Act and in both cases (faulty or incorrect) the retailer is responsible for all costs incurred in returning the products. Again it is well worth checking the policies on this before buying; for example on HMV you’d still have the same problems trying to return a game if it were incorrect or faulty.

Some faults may not be apparent for some weeks, or even months, so it is important to know how you’d go about returning a faulty item, particularly if it were a Christmas present. Some companies, like Amazon, will send you out a replacement item right away, even a couple of months after you bought the item, and then ask you to return the faulty item to them. This lessens the impact and hassle of returning a faulty product. Others companies however, insist that you return the faulty item to them first before any chance of a refund or replacement. The Sale of Goods Act states that they have to resolve your problem (i.e. repair, replace or refund) in a reasonable amount of time, but it isn’t specific and some companies can leave you hanging around for months. Not really an option for Christmas presents.

Return Delivery

Some companies also penalise customers returning goods. If an item is faulty, the retailer has to bear the cost of all charges, including return postage, but this doesn’t stop some companies charging, so again check their returns policy. If you are returning unwanted items under the Distance Selling Regulations, then in most cases you are responsible for return postage. Some companies do collect or cover the cost of returns, but they are not legally obliged to. However if they do not cover return postage they are obliged to make this clear either in their terms and conditions, returns policy or in your order email so again check their policies.

If you are ordering something that you’re not too sure about and just wish to have a better look at, check to see if you’re liable for return postage, on heavy or expensive items, it can be costly.

Lost Items

The final thing that you should check for is a companies policy on items lost in transit. It’s all well and good getting your Nan her favourite compilation CD for Christmas, but what if it never turns up? Royal Mail state that an item is considered lost when it hasn’t arrived in 15 working days, some companies however won’t consider it lost until 45 or even 60 working days have passed. So unless you began ordering presents in early October, you could find that some of your presents are MIA come Christmas Day.

Check the policies of the company for items lost in transit. The retailer is responsible for the lost item, which the Distance Selling Regulations make clear:

Where goods are lost in transit from you to the consumer you will need to either send new goods or offer the consumer a full refund, including delivery charges. See paragraph 3.20 for more information.

Unfortunately it doesn’t stipulate just when an item is considered lost in transit, so although the law is on your side, just when you will receive your new item or refund can vary from company to company, so make sure that you check. If you ordered an item in mid November for a Christmas present that is lost, you do not want to be waiting around until February for its replacement.

It is also worth noting that a retailer cannot make you pay for transit insurance, the items are theirs until they reach you, i.e. any insurance or claims of loss are theirs to deal with.

Buyer Be Aware

All in all consumers in the UK are well protected, we simply need to make sure that we are all aware of our rights, and most importantly that the retailers are aware of their obligations under the Sale of Goods Act and the Distance Selling Regulations.

To do this we simply need to read through their policies; of course this could be very time consuming for every purchase, but you’d only need to do this once for each company and as long as you stick to those that operate within the law and provide a good service, and avoid those that do not, you’ll steer clear of any major problems and inconveniences further down the line.

Perhaps the most common ways that on-line shoppers are exploited is in regards to faulty or returned goods.

The Restocking Fee

One of the most common tactics by unscrupulous traders is the infamous restocking fee. This is where, when a customer decides to return an item for some reason other than it being faulty, as per the Distance Selling Regulations, they are charged a restocking fee or an administration charge, typically 10% of the item cost, some companies even charge as much 20-25%!

This can add up, as many companies also expect their customers to bear the costs of returning unwanted items. Take for example our 8GB SD card, priced at £11.49 (£13.50 incl VAT) plus £1.50 delivery means that it would cost £15 to have it delivered to your door.

Now if a customer were to decide to return this item to us it would cost them just £1.50 and they’d get back their full £15. If we were one of these unscrupulous traders, it would cost somewhere between £3-£5.

One of our major competitors charges a restocking fee of 10%. An 8GB card from them is about £21, plus £1.99 postage. Simply returning the item to them, as customers are entitled to do by law, would set a customer back almost £5.

Such fees are an easy way of making money for on-line retailers, a restocking fee either discourages customers from returning goods, as they would then be out of pocket and have nothing to show for it, or at worst for the retailer, it is money for old rope.

The Law

I have used the word unscrupulous here, but such actions are in fact illegal. This extract from the Distance Selling Regulations explains:

If you want the consumer to return the goods and to pay for that return, you must make it clear in the contract and as part of the required written information – see paragraph 3.10. If the consumer then fails to return the goods, or sends them at your expense, you can charge them the direct cost to you of the return, even if you have already refunded the consumer’s money. You are not allowed to make any further charges, such as a restocking charge or an administration charge.

The law is unambiguous on this, it is illegal for companies to charge consumers (it’s a different matter for businesses) a restocking or administration fee. The question then of course is why do they do it?

Unfortunately it is a simple answer of – because they can.

Terms and Conditions

Most companies place this sort of information in their terms and conditions, and unfortunately few consumers take the time to read them, and who can blame them? It is only after a customer has paid and when they want to return an item, that they find out about such things. By this time the restocking or administration charge will come straight out of any refund.

The only recourse a customer has at this point is Trading Standards and the Small Claims court. Naturally with the law on the side of the customer it is a sure fire certainty that the customer will win.

Unfortunately it is not as clear cut as that, most people won’t bother going through all the hassle of taking a company to court to claim money back and unfortunately the minimum amount that you can claim through the small claims court is £15. Few items will have a restocking fee that large, so this means that basically such companies can get away with it.

The only real option a consumer has is to avoid such companies in the first place. Always read the Returns information or FAQs before buying from a company on-line. At the first mention of any such fees, direct your browser elsewhere.

Faulty Goods

Another shady tactic used by on-line retailers is with faulty goods, where they ask the consumer to take the matter up with the manufacturer, usually after the customer has had the goods for a certain period, normally 28-30 days.

Unfortunately there is no way to avoid this pre-sale, other than to read reviews about the company before hand and see what others have had to say about their service. This is part of the reason that Horizon Flash Memory has joined the Comodo UserTrust scheme.

Once again this palming off of the customer onto the manufacturer contravenes the law, this time the Sale of Goods Act, which clearly states that your contract is with the company that you handed your money over to, not the manufacturer. This is true of any retailer, whether the item was purchased on-line or on the high street.

The reason that some companies use this tactic is once again money; this time they are trying to keep hold of the money taken from the customer. If a product is faulty, they will either have to repair it, replace it or give the customer a refund. By deflecting this onto the manufacturer, the retailer gets to keep all of the money. The manufacturer is under no obligation to give the customer his money back, and may even charge to repair the goods.

Again the only options are Trading Standards and the Courts, but as more money is likely to be involved than claiming back the restocking fee, the Small Claims court is probably the best option. The court would likely order the retailer to fulfil its obligations under the Sale of Goods Act and also refund the customer his court costs.

Once Bitten, Twice Shy

The most important thing to remember in all of this is that once a retailer has ripped you off in this manner, never to shop there again. The internet offers an abundance of choice, which means that there are plenty of honest and trustworthy traders, such as Horizon Flash Memory and many others where a customer can spend his money.

Also take advantage of review sites, not just for when things go wrong but also when you are happy with a service, this will help show that good customer service can be rewarding.

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