Avoiding the Pitfalls of Shopping On-line

Buying on-line can be a minefield at times, although it is thankfully fairly rare for consumers to fall for on-line scams these days, such as the infamous Nintendo Wii scam featured on Watchdog, there are unfortunately many other dangers and other ways of being ripped off.

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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