E-Commerce: Online Shopping
There are no laws in Australia that specifically deal with online shopping. Legally the same requirements exist whether the purchase is conducted over the internet or offline (e.g. shopping at a retail outlet). Therefore, when you buy goods or services over the internet from an Australian trader, Australian consumer protection laws apply.
Consumer protection laws
The most significant issues in protecting the rights of an Australian consumer shopping online are:
- unconscionable conduct;
- misleading or deceptive conduct and passing off; and
- conditions and warranties.
Actions you can take if you believe any of these rights have been breached are covered under Australian Consumer Law.
Other consumer protection
If you are buying goods and/or services over the internet, other consumer protection laws may also apply, depending on your circumstances.
Consumer credit laws regulate the purchase of goods and/or services by credit e.g. credit cards, home loans, personal loans, associated mortgages and leases.
Electronic Funds Transfer Code of Conduct (EFT Code) is a voluntary code that protects consumers and applies to member organisations. The EFT Code regulates methods of access during an electronic transaction, such as the use of an ID number, password, personal identification number (PIN) or digital signature; and transactions that utilise stored value facilities and digital coins for electronic payment.
The Electronic Transactions Act 1999 (Cth) relates to dealings between individuals and Commonwealth government agencies. It provides that if commonwealth law requires information to be given in writing, the requirement is deemed to be met if the information is given electronically. Similarly if written records are required to be kept an electronic version of that document will satisfy the requirement. The equivalent state legislation is the Electronic Transactions Act 2000 (Tas).
Protect yourself when shopping online
Before you buy a good or service online, you should find out the following information.
Who is the Trader?
Establish who is selling the good or service, including details of the trader’s business: physical address; business registration details (e.g. business name and/or ACN/ABN number) and contact details.
The Australian Securities & Investments Commission (ASIC) has a free service on its website allowing users to search for registered business names.
What are the details of the transaction?
Knowing the full details of the transaction before entering into an agreement with the trader will help you to know what to expect if you buy the good or service. Details you should obtain include:
- a clear description of the good or service;
- the full cost in Australian dollars of the good or service being purchased, including costs like delivery, insurance and credit card charges;
- any return, exchange, refund and warranty policy that the trader has regarding the transaction;
- when you will receive the good or service;
- the terms of any insurance over the good or service bought (e.g. whether it includes damage of the good while being delivered);
- the terms and conditions of the agreement. Read them carefully as they outline what you agree to be bound by. Always print out any terms and conditions that you agree to because traders may change them subsequently. Keep any correspondence (including emails) between you and the trader, and print out any forms that you fill in and any offers on web pages that you accept, as they will be relevant to your transaction; and
- the trader’s policy on handling complaints and resolving disputes.
Are there any privacy and security concerns?
Consumers often use credit cards when shopping online. This involves having to submit your credit card details over the internet. The nature of the internet means that transmitted information may be intercepted by a third party. In order 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 of security used in online shopping is the Secure Sockets Layer (SSL) technology. SSL technology encrypts data transmitted in order 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 whether the information you will send will be encrypted. To obtain information about the security used by the website, you can double-click on the unbroken key or padlock.
Consumer Protection Laws
Internet auction sites (e.g. eBay) provide a mechanism for individuals to enter into transactions with each other, often referred to as consumer-to-consumer (C2C) transactions.
If the website operator has control over the goods being auctioned it is likely to be regarded as a business-to-consumer (B2C) transaction. If the website is acting as a trading centre it is more likely to be a C2C transaction provided that the vendor is not a business using the site to clear stock. C2C transactions conducted through internet auctions may be regarded as private sales between individuals, and not as trade or commerce (and therefore not caught by the TPA). This does not mean that the consumer has no rights in this situation, but they have fewer rights than if consumer protection laws applied.
If you buy a good or service through an internet auction and consumer protection laws do apply (because you bought from a business or in the course of trade or commerce) you may still have lower protection than if you had not bought the item at an auction. This is because some of the implied conditions and warranties (as discussed above) do not apply when the goods are purchased at an auction. The specific law varies from state to state.
Before Bidding at an Internet Auction
Read the auction site’s terms and conditions, policies and rules, to understand the service the auction site is providing and what to expect. If there is a “how to use” tutorial on the auction website, take it in order to familiarise yourself with the services offered. Look at how frauds and complaints are handled by the auction site. Some auction sites offer protection to successful bidders in the form of free insurance of up to a specified amount when things go wrong, e.g. 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 for answers. If their answers are unsatisfactory, do not make a bid.
Check for any feedback comments or ratings about the seller on the internet auction website. Comments from previous purchasers will help you decide whether to participate in the auction.
Know the product that interests you. Look at the market or retail price, written descriptions 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; and what payment mechanism can be used.
Bidding at an Internet Auction
Set the maximum price that you are willing to pay for the good and do not exceed that price in your bid. The maximum price will include all costs, including items like insurance, taxes, shipping and handling. Setting limits on what you are willing to pay will help to prevent you from bidding excessive amounts for an item where its bidding price has been inflated by fake bids. Although fake bids are not allowed by auction websites, such activities do occur and are a concern.
A good method of payment when shopping online is to pay the supplier when the product has been delivered (cash on delivery). If the seller does not agree to such an arrangement, then a credit card should be used, because of the “charge-back” service that many financial institutions attach to their credit cards (reversing the card charge if the seller fails to deliver the product).
Sending a bank cheque or money order before receiving goods exposes you to higher risks of fraud. If sellers will not send the product unless there is such a payment, then you have to be willing to take the risk.
PayPal is an electronic payment system commonly used on auction sites and is essentially an alternative to cheques or money orders. The recipient of a PayPal payment gets a financial transfer from PayPal, which processes payments for a fee.
An alternative is to use an escrow agent. The escrow agent’s role is to hold the payment for the buyer until they receive the product. Escrow agents are used to protect both parties from fraud, and usually charge the buyer a percentage of the cost of the product for the service. If you use an escrow agent you should be familiar with the terms of the service offered, and check to see whether the agent is reputable.
Always keep records, either by saving on your computer or printing out details of the transaction, including the product description (written and photograph), the seller’s identification, every bid made, all emails between you and the seller and every receipt/record provided.
Consider using insurance offered by the auction site or another organisation, to protect yourself if something goes wrong.
If Something Goes Wrong
Post feedback about the seller on the auction website.
Many auction websites have feedback services allowing you to post a comment and/or ranking about the trader who sold you something. This allows subsequent users to be warned about the seller, but will not provide you with any refund or exchange.
Make a claim to the auctioneer
Some internet auction sites offer free insurance up to a specified amount. Check the terms and conditions of the insurance policy on the auction website to see if you can make a claim. You will probably need to make a “charge-back” application with your payment card provider (see: “Bidding at an internet auction”, above) before you can make a claim with the auctioneer.
Make a complaint against the auction website
Although you did not purchase something from the auction site, they might have breached your rights as a consumer; for example, if the auction site misled or deceived you by making misrepresentations about the site’s safety regarding fraud.