7.6 Buying online over the internet

22 Aug 2016 - 11:02 | Version 20 |

Contributed by JaneBlack and Kim Parker and current to 1 May 2016

Online shopping can increase choice and lower costs for consumers. This chapter outlines consumer rights for online shoppers, how consumers can protect themselves when shopping online, the different ways consumers shop online, and options for when things go wrong.

Generally the Australian Consumer Law (ACL) provides the same protection to consumers who shop online compared to consumers who buy in shops, but there are some limitations:
  • the ACL does not apply to peer to peer sales
  • businesses based overseas are subject to Australian law if they sell to Australian consumers. However it can be difficult for you to obtain a remedy if things go wrong or to make an overseas business comply with the ACL
  • if a consumer has been scammed when shopping online it can be difficult to get any money back.

The ACL is part of the Competition and Consumer Act 2010 (Cth).

Consumer rights under the law

Both contract law and the ACL apply to goods and services bought online. A more detailed outline can be found in the chapter Contracts and consumer protection. Under the ACL online businesses selling goods and services must:
  • not mislead or deceive you or hide costs and other details from you
  • recognise and comply with automatic ACL consumer guarantees, giving you the right to ask for a repair, replacement, refund, cancellation or compensation as appropriate if there is a problem
  • ensure products and services meet Australian safety regulations
  • compete fairly to ensure a variety of choices on quality and price
  • not engage in unconscionable conduct

Misleading or deceptive conduct and misrepresentations

Traders in Australia must not engage in conduct that is misleading or deceptive, or is likely to mislead or deceive. The conduct can be a statement about existing facts, a prediction about the future, or even silence.

For the conduct to be unlawful, it must convey or contain a misrepresentation, and not merely be confusing. Whether the trader intended to mislead or deceive you is irrelevant.

In online trading, representations might be made by: statement or images placed on the trader's website or online publications, Frequently Asked Questions sections, or forms. Misleading conduct online might extend to statements made to consumers by a business through an instant chat room function or call centre right through to any product reviews or testimonials included on the trader's website.

See Contracts and consumer protection for more information on your consumer rights and what to do if you think your rights have been breached.

Drip pricing

Businesses can apply various additional fees and charges for goods and services. For example, some businesses charge booking and service fees that arise when purchasing goods online through a particular payment method. Any of these additional fees and charges must clearly be disclosed to you at the beginning of the online purchasing process.

Drip pricing is where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges which may be unavoidable are then incrementally disclosed or "dripped". Drip pricing may in some cases mislead you into paying more than you expected for a product.

When shopping online it can be easy to become invested in long and complex booking processes. You can reduce situations where you end up paying more than initially expected by following the tips below:
  • be aware of misleading drip pricing practices when shopping online for services in the airline, ticketing, accommodation add vehicle rental sectors
  • shop around and be aware that you may need to pay more than what was advertised. Add all the charges together. Don't just focus on the advertised price as the cheapest advertised price may not be the cheapest final price
  • be prepared to back out of the transaction, especially when you start to encounter additional charges
  • look out for pre-selections and make sure you deselect anything you do not want to purchase. Thoroughly check your booking before you make any final payments

If during an online purchasing process you experience additional charges that were not adequately disclosed at the beginning of the process, you can lodge a complaint with Northern Territory Consumer Affairs (NTCA) or the Australian Competition and Consumer Commission (ACCC).

Consumer guarantees

Under the ACL when you buy products and services they come with automatic guarantees that they will work, do what you asked for, and are safe. This applies to goods and services bought online or in an actual shop. Any attempt by the trader to exclude, restrict or modify these guarantees warranties will be void (that is, not effective).

If the goods or services do not meet the consumer guarantees, consumers may be entitled to a refund, replacement or repair as appropriate under the ACL.

The manufacturer or trader can also provide an additional "manufacturer's warranty" or express warranty for the product for a specified period. This will not affect the automatic ACL consumer guarantees which will still apply. These automatic guarantees can in some cases continue after the period of the manufacturer's warranty or express warranty has expired.

More information on consumer guarantees can be found in Contracts and consumer protection .

Consumer credit laws

People often use credit cards for online shopping. This involves submitting credit card details over the internet. Consumer credit laws regulate the purchase of goods and/or services by credit, through credit cards, home loans, personal loans, mortgages and leases, including where this is done over the internet (see Buying on credit ).

As with other consumer protection laws, Australian consumer credit laws will only regulate transactions with traders or businesses carrying on business in Australia (for example, where they have a registered business or office, or other assets). So there are greater risks for a consumer who buys goods or services on credit over the internet with an overseas trader or business that is not carrying on business and does not have assets in Australia.

The EFT code

The Electronic Funds Transfer Code of Conduct (EFT code) is a voluntary code that protects consumers and applies to member organisations. The code regulates:
  • methods of access during an electronic transaction, such as the use of an ID number, password, PIN or digital signature
  • transactions that utilise stored value facilities and digital coins for electronic payment.

For more information on the EFT code, see Banking.

(Parts in red must be reviewed/updated).

How to protect yourself when shopping online

Before you buy something online, you should find out the information set out below in order to protect yourself.

Who is the trader?

Work out who is selling the good or service, including details of the trader's business:
  • the physical address and location of their office
  • business registration details (such as business name and/or ACN/ABN number)
  • other contact details (contact names, phone, and email).

The Australian Securities and Investment Commission (ASIC) has a free service on its website (www.asic.gov.au) allowing users to search for registered business names. ACN/ABN numbers of Australian organisations are located at: http://www.asic.gov.au/online-services/search-asics-registers/

If the business registration details are not prominently displayed on the website, check at the very bottom of the website and in any terms and conditions or in the "About us" section. Look for the words "Pty" or "Ltd" which are often listed after a business name.

The ACCC recommends consumers only consider buying from online sellers in Australia or overseas that:
  • have a good reputation
  • display clear processes for solving problems and giving refunds, replacements or to organise repairs or access to spare parts or refills
  • display and use clear systems for protecting the security and privacy of your personal and financial details
  • display their business registration details, phone number and physical address

Is it a business transaction or a private sale?

Sometimes a consumer will not be buying from a business or trader, but from an individual. This may be the case on peer to peer selling sites such as Gumtree or eBay. If the seller is not a trader then the consumer does not receive protection under the Australian Consumer Law as this is considered a private sale. However, the laws of contract still apply (see Contracts and consumer protection).

Online product reviews

Reviews about goods or services may appear on a business' own site, on social media, in a news article, or on a review platform. Review platforms are sites which specialise in presenting product reviews about a range of competing businesses.

When relying on online product reviews for information about goods and services, consumers should be aware that not all posted reviews are legitimate.

Here are a few tips for consumers who rely on online product reviews:
  • seek information from multiple sources
  • look at multiple reviews and comments about the same business and take note of any irregularities, such as a spike in positive reviews over a short period of time or multiple reviews with a similar tone and vocabulary, as they may have been authored by the same person
  • be wary of reviewers or online contributors whose profile indicates that they have only ever written one review. The profile may have been created to write a fake review.

Review platforms which require proof of purchase before a review can be written are likely to be more reliable than those which do not.

Check to see whether the review platform has commercial arrangements with reviewed businesses and what benefits such arrangements offer. Examples of benefits which might affect the review results include:
  • allowing partnering businesses to choose their favourite review to appear at the top of their page
  • giving customers of partnering businesses who attempt to submit a negative review the option of contacting the business directly to resolve their complaint rather than posting the review.
  • be wary of review platforms with overwhelmingly high reviews. This may be attributable to the deletion of credible negative reviews by the review platform.

What are the details of the transaction?

You should find out the full details of the transaction before you enter into an agreement with the trader. There should be terms and conditions and you should read them all carefully and keep a copy. They will tell you what your rights and responsibilities are under the agreement and the trader's rights and responsibilities. The sorts of details you should find out include:
  • a clear description of what is being purchased and the quantity
  • the full cost in Australian dollars, including any additional costs such as delivery, insurance and credit card charges
  • any return, exchange, refund and warranty policy that the trader has regarding the transaction (remember, a trader cannot exclude, restrict or modify a consumer's rights under ACL consumer guarantees. (See Consumer Guarantees)
  • whether any manufacturers or express warranties also apply
  • when and how delivery will take place
  • the terms of any insurance (for example, does it include damage to the goods while being delivered?)
  • the trader's policy on handling complaints, resolving disputes and dealing with warranty claims
  • the terms and conditions of the agreement. Read these very carefully because they explain what you and the trader are agreeing to do.

Keep all correspondence (including emails) between you and the trader, and make a copy of any forms that you fill in and any offers on web pages that you accept, as they will be relevant to your transaction.

Too good to be true?

If the deal seems too good to be true, it might be a scam. Online shopping scams can involve scammers pretending to be legitimate online sellers, either with a fake website or a fake ad on a genuine retailer site. Consumers should check carefully to ensure they are not being scammed. Some of the warning signs of scams are:
  • a product is advertised at an unbelievably low price, or advertised to have amazing benefits or features that sound too good to be true
  • the other party insists on immediate payment, or payment by electronic funds transfer or a wire service. They may insist that you pay up-front for vouchers before you can access a cheap deal or a give-away
  • an online auction seller and any initial bidders have a very poor rating, or the seller wants to complete the sale outside of the auction website. If you do this, you lose any protection offered by the website operator
  • an online retailer does not provide adequate information about privacy, terms and conditions of use, dispute resolution or contact details
  • the seller may be based overseas, or the seller does not allow payment through a secure payment service such as PayPal or a credit card transaction

The ACCC Scamwatch website provides detailed information about current scams and what to look out for.

Paying for your purchase safely

Shopping online means that consumers often pay the seller electronically through a credit card or escrow agent. Consumers need to take precautions to avoid losing money. There are a few options for paying for items bought online:
  • pay the supplier when the product has been delivered (cash on delivery) - that way you minimise the risk of anything going wrong or there is some sort of fraud
  • pay by credit card - many financial institutions offer a 'charge-back' service with their credit cards. This allows the customer to ask for a reverse of the card charge in the event the seller fails to deliver the product
  • pay using an escrow agent - the agent's role is to hold the payment for the buyer until the product is delivered to the purchaser. Escrow agents protect both parties from fraud, and usually charge the purchaser a percentage of the cost of the product for their service. If you use an escrow agent you should be familiar with the terms of their service offered, and check to see whether the agent is reputable.

When submitting credit card details over the internet to minimise the risk, you should make sure that the trader is using a secure system for transferring information during a transaction. The most common method used in online shopping is the Secure Sockets Layer (SSL) technology. SSL technology encrypts data to protect the information being sent, including your credit card details. An unbroken key or padlock at the bottom of your web browser will indicate whether there is a secure connection, and so whether the information you send will be encrypted. To obtain information about the security used by the website, you can double-click on the unbroken key or padlock

What to avoid when making payment

Avoid paying money in a way that can't be reversed if something goes wrong.
  • avoid sending a bank cheque or money order or making a direct banking deposit before receiving and checking the goods
  • don't deal with a stranger that asks for up-front payment via money order, wire transfer, international funds transfer, pre-loaded card or electronic currency, it could be a scam
  • never agree to do business privately outside of the online auction site, for example by direct email, as this could be a scam
  • beware of sellers asking for your bank PIN or password. Do not buy from these sellers. Report them to the ACCC scamwatch or NTCA

Keeping records

Always keep records, either by saving on your computer, taking a screen shot, or printing out details of the transaction, including:
  • the product description (including a photograph)
  • the seller's identification
  • every bid made
  • all emails between you and the seller
  • every receipt or record provided.

Buying extras like insurance or fast delivery

If you are considering taking up insurance or delivery offered by the online trader or another organisation, carefully read the terms and conditions to see what protection the insurance offers you and what conditions are attached to the delivery services.

Some sellers may not appreciate how remote some NT consumers may be located from the seller's distribution centre. This can impact how fast a 'fast delivery' can be or whether the estimated delivery times are realistic. Ask the seller questions or do your own research to understand whether paying more for a 'fast delivery' is worth the extra money.

Protecting your privacy

Always check for a privacy policy on the trader's website. The policy should explain why the trader collects your personal information and how that information will be used. The trader might want to use your personal information for marketing purposes or even to sell it to third parties. The privacy policy should tell you if this is so and should give you an opportunity to opt-out.

If there is no privacy policy on the trader's website you should be concerned, because the trader is not informing you of what will happen to any personal information that you submit.

As with Australian consumer protection laws, Australian privacy laws only regulate personal information passed to traders or businesses carrying on business in Australia. For more information about privacy issues or to make a privacy complaint, you can visit the website of the Office of the Australian Information Commission on www.oaic.gov.au .

Different ways to buy

There are lots of way to shop online:
  • by auction
  • peer to peer buying
  • direct from a business based in Australia
  • from a person or business overseas
  • through comparator websites
  • group buying
  • beware of scammers

Buying through online auctions

When you buy through an online auction you may be buying from an individual or a business. Ebay is an example of an online auction site where both businesses and non-businesses sell goods.

There are generally three types of auctions available online. The type of auction impacts who you might get help from should something go wrong.
  • marketplace online auctions - these are a popular way of buying, with a well-known example being eBay. In these virtual markets, a business sets up the website and provides a set of rules and guidelines, but it is mostly left to the individual buyers and sellers to deal directly with each other. In these types of auctions, the business running the website may not be directly involved in the auction process and may not be an agent for the seller.
  • traditional auctions - this is where the auctioneer acts on behalf of the seller of the goods and instead of interested buyers gathering together in person, an online auction house uses a website to create a virtual auction. In this type of auction, the auctioneer may be an agent for the seller.
  • auctions conducted by businesses - this is where the business running the website offers their own products for sale by an auction process.

Before making a bid

  • make sure your computer, tablet or phone has up-to-date security and anti-virus software installed.
  • work out what type of auction it is - marketplace online auction (e.g. eBay), traditional auction, an auction conducted by a business.
  • read the auctioneer's terms and conditions, policies and rules, to understand the service the auctioneer is providing and what to expect.
  • if there is a tutorial on the auctioneer's website on how to use the site, take it in order to familiarise yourself with the services offered.
  • look at how frauds and complaints are handled by the auctioneer. Some auction sites offer protection to successful bidders in the form of free insurance of up to a specified amount when things go wrong; for example, if the item purchased is not delivered.
  • verify the seller's identity and contact details.
  • make arrangements with the seller about what to do if there is a problem.
  • if you have any queries, contact the seller. If the seller's answers are unsatisfactory, do not bid.
  • check feedback comments or ratings about the site or seller on the website or on other websites. Comments from previous purchasers will help you decide whether to go ahead.
  • know the product that interests you and shop around. Look at the market or retail price, the written description and any photographs of the product, and any warranties.
  • find out the terms of sale, including:
      • who pays for shipping and handling
      • whether there is insurance, what it covers, who pays for it and what it costs
      • whether there is a return policy
      • whether any express warranties apply to the goods or services and any conditions attached to those warranties
      • whether there is any acknowledgement that the automatic ACL consumer guarantees apply to the goods or services
      • what payment mechanism can be used.

When making a bid or purchase

Work out the maximum price you are willing to pay and do not exceed it. It should include all costs, including items like insurance, taxes, booking fees, credit card surcharges, shipping and handling.

Setting limits on what you are willing to pay means you will not be tempted to bid too much for an item. Fake bids are not permitted by auction websites, but they may occur.

'Buy it now' option - some auction sites give you an option to buy now without having to bid. If you choose to buy immediately you will have all your usual shopping rights, unless the seller is a private individual and it is a one-off sale.

Information on making payments safely are listed above in Paying for your purchase safely.

If something goes wrong in your auction transaction or you feel you have been defrauded, you should take the matter up immediately with the auctioneer, the online seller and if necessary, the NTCA or the ACCC.

Peer to peer buying

There are lots of ways to buy goods and services online from people who are not businesses. One example of this is buying something second hand on Gumtree from someone who is not a trader. If the seller is not a trader then the consumer does not receive protection under the Australian Consumer Law as this is considered a private sale. However, consumers still have rights under the law of contract. See Contracts and consumer protection in this chapter.

Buying direct from a business based in Australia

Lots of Australian businesses now have an online shop as well as physical shops. Some Australian businesses only have online shops. Your contract and consumer rights apply to both of these. See Contracts and consumer protection in this chapter.

Purchasing from overseas

When you buy goods and services from a trader that is based overseas the ACL still applies because the seller must comply with the ACL as they are selling goods or services in Australia . However, on a practical level it is much more difficult to obtain a remedy from a trader overseas if something goes wrong. Even if Australian consumer protection laws apply and an Australian court has jurisdiction, it may be difficult or expensive to enforce a judgment against a trader that does not have any assets (like properties, offices or other investments) in Australia.

Customs

When overseas traders supply physical goods, the Australian Customs Service checks them to decide whether they should be cleared for entry. Imported goods that are prohibited or restricted are seized. Others may require a permit. Imported goods may also be subject to a customs duty - that is, a fee for coming into the country. Relevant factors in determining the rate of duty payable by the importer (that is, the consumer) are:
  • the classification of the item by the Australian customs tariff
  • the country of origin.

Goods and services tax (GST)

The Australian Customs Service also levies GST on imports. Low value thresholds apply, and the method of ordering (electronic, phone or mail) does not affect whether GST is payable.

GST is currently not being collected in cases where:
  • foreign traders supply intangible products, and/or
  • services are supplied to private consumers.

When purchasing from overseas:
  • find out from the Australian Customs Service whether you can legally import the good you wish to buy, and whether it is subject to GST or any other taxes.
  • goods bought from overseas can have significant delivery expenses that you will have to pay, so always check the delivery charges carefully.
  • overseas traders may not list the purchase price of the good or service in Australian dollars - do the conversion.
  • check the overseas trader's website for any terms and conditions that state which country's laws apply, and which country's courts would be relevant to bringing an action should a dispute arise.

It is common practice for an overseas trader to designate in its sale contract that the applicable law and courts for the transaction are those of the country where the trader is located. However, as noted earlier, there is some legal uncertainty in this area.

Parallel imports

Parallel imports is when a seller does not have specific permission from the manufacturer to sell those product in the Australian marketplace. You can buy goods that are considered parallel imports, but it can be difficult to exercise your consumer rights. If you are unsure whether you're buying a parallel import ask the seller or manufacturer, or check the manufacturer's website for a list of authorised suppliers or distributors in Australia. See the ACCC website for information on parallel imports.

Buying through comparator websites

Comparator websites compare products offered by a range of suppliers and frequently include multiple products offered by the same supplier. Comparator websites can be a useful tool, but make sure you know how these sites work before relying on a comparison.

When you shop online, you have the same rights as you have when you buy in a store. You have the right to expect:
  • truthful and accurate representations, statements or claims
  • all the necessary and important information that you need
  • transparent disclosure of commercial relationships between the comparator website and the businesses being reviewed on those sites.

Comparator website operators may be considered misleading if they omit to display (or incorrectly display) relevant information and are not transparent about commercial relationships. For example, if the website receives a commission from a particular company for sales made through the comparator website.

The ACCC provides tips for using comparator websites.

Online group buying

Online "daily deals" and group buying websites are channels for consumers to buy goods or services at discount prices. Before you take up an offer from these websites, check the offer thoroughly to make sure you get what you pay for.

Some websites (such as Catch of the Day, Shopping Square, oo.com.au, Deals Direct and Crazy Sales) offer discount deals directly to customers for a limited time, such as daily deals. Stocks may be limited and items may sell out before the offer ends.

Voucher websites, also referred to by some people as "daily deals" or "deal of the day", sell vouchers or coupons which can be exchanged for goods and services at discount prices. In most cases, the vouchers are offered on the condition that a minimum number of buyers take up the deal. If you take up an offer, you will usually be asked to enter your payment details online. A voucher is then emailed to you to print off and claim your purchase direct from the business. Many of these websites require online membership.

How to protect yourself when buying from discount websites

To make sure you get what you pay for:
  • find out exactly what goods and/or services are being offered and what is not included in the deal
  • read the fine print by checking the terms and conditions of sales on the website carefully, including expiry dates on vouchers and any black out periods that might apply to certain services
  • check with the website to see if they give refunds if the business supplying the goods or services goes out of business before vouchers are redeemed
  • be prepared for delays when making bookings. Group sales can create a lot of demand. Before you buy the voucher, check the conditions to see if you are entitled to a full refund if you are unable to book on certain dates that suit you.

Consumer rights under the ACL still apply to goods and services bought through online group buying.

Beware of scammers

No one wants to be scammed, but sometimes this happens. Scammers use the internet in very smart ways to steal money from consumers. Scammers use local phrases when communicating, create fake websites that look like legitimate businesses, all to build trust with unsuspecting consumers. Consumers who use the internet often get a lot more choice, but there is a risk of being scammed. To reduce the risk of being scammed see Too Good to Be True? in this chapter or visit the Scamwatch website.

Options when things go wrong

Work out what happened

If you think something has gone wrong, work out what happened, where things went wrong, with who, and what you want to fix the problem. You may have to provide information to multiple parties, so it is good to understand the basic facts at the start.

Contact the trader

If something goes wrong, contact the trader (or, for internet auction purchases, the seller) by phone, fax, post or email to try to resolve the matter. Explain the problem and how you want it fixed (for example, a refund or return).

Keep records of all your communications with the trader. It is recommended that you write a letter (or email) so that there is a record of your complaint, which can be used if further action is needed.

For help on writing a complaint letter or email see the ACCC website, 'Writing a complaint letter'.

Contact your payment card provider

If you purchased the good or service with a payment card (such as a credit card, debit card or stored value card), there may be protections for you. For example, some credit cards have a 'charge-back' facility. You should contact your payment card provider to let them know what is happened and to find out if they can help.

Make a claim to the auctioneer or website

If you purchased something through an online auction or a website that provides a platform for multiple sellers you can try and resolve the issue with that website. Some internet auction websites offer free insurance up to a specified amount.

Check the terms and conditions of the insurance policy on the auctioneer's website to see if you can make a claim. You will probably need to make a charge-back application with your payment card provider before you can make a claim with the auctioneer.

Often these websites have agreements and codes of conduct with sellers, so you can complain to these websites if the seller does not cooperate with you.

Contact an industry body or professional association

Many traders are members of an industry body or professional association that follows a code of conduct. If the trader belongs to such a body or association, you should contact it as it may be able to help resolve your dispute with the trader.

If the trader is overseas, the relevant foreign consumer protection agency might be able to tell you whether the trader belongs to an equivalent overseas industry body or professional association.

Seek help from a consumer protection agency

If the problem is not resolved and you are living in the NT you can contact NTCA to get help to resolve the issue. You can also make a complaint to the ACCC.

When dealing with overseas traders you can also visit: www.econsumer.gov. This is a joint project of consumer protection agencies from around the world that provides information for international consumers and facilitates cross-border complaints.

If your dispute has not been resolved, you may want to take your matter to the relevant court or tribunal. However, legal action can be costly and may only be worth pursuing if the dispute concerns a significant sum of money. Legal action against an overseas trader is significantly more expensive than against a local Australian trader, and a judgment in your favour may be difficult to enforce.

Whether you should proceed with legal action depends on the circumstances of your case. You should obtain advice from a qualified legal practitioner.

Is it a scam? Don't pay any more money

If something has gone wrong, there is a risk that you may have been scammed. Once scammers have received money from a person, they will continue to target this person for more money as you may be placed on a 'list' that is subsequently shared with other scammers. Scammers make things up such as, "your product is being held by customs and you just need to pay some more money". Before sending any more money check out the ACCC's Scamwatch website for signs of scam or ask for advice from family member, friend, or legal practitioner, or call the ACCC. You might feel ashamed that you may have lost money to a scammer, but don't let this stop you from getting help.

Tell the world

If you are not happy about something to do with the transaction tell your friends and family. You can also rate or write a review of the trader, seller, or website on their website, social media or other forum.

This site is powered by FoswikiCopyright © by the contributing authors. All material on this collaboration platform is the property of the contributing authors.
Ideas, requests, problems regarding AustLII Communities? Send feedback