European consumer report casts doubts on online delivery and use of credit cards

One in three goods ordered from websites in the European Union fails to show up, according to a report by the European Consumer Centre (ECC) network that casts significant doubt on the consumer-friendliness of online shopping.

The ECC network's report on the online marketplace has warned that shopping on the internet is hampered by problems such as failure to deliver, lack of information on consumer rights and failure to reimburse consumers for returned goods.

The report also raises questions about the validity of credit card pre-payments for goods online, when so many disappear without trace.

Some 13 members of the ECC network participated in the mystery shopping exercise, ordering goods such as CDs, DVDs, t-shirts, ink cartridges, paper, toys, dictionaries and watches from 114 online traders in the European Union.

However, only 75 of these orders resulted in a delivery, meaning that 34 per cent of the goods were not delivered.

Under the Distance Selling Directive, consumers have the right to a seven days' cooling-off period after receipt of goods or services before they make a final decision as to whether or not they want to keep it. Consumers are entitled to a refund during this period without having to give a reason. The refund should also include the cost of posting the goods back to the vendor.

To test if the online traders adhered to the legislation, the ECC network returned 57 of the 75 goods received. In 18 of those cases, the network did not receive a refund.

The report found that of the 68 purchases that were made by credit card, almost a quarter (24 per cent) of the retailers made withdrawals on the same day that the order was placed. More than half of the withdrawals were made within two days of the ordering date.

"Pre-payment is normally a perfectly acceptable form of payment for goods and services, but given that 8 per cent of the total orders were confirmed, charged but not delivered, it may be that pre-payment is a bit questionable when it comes to e-commerce," said Mr Fredrik Nordquist, a legal adviser for ECC Stockholm and the main author of the report.

Other consumers are left waiting anxiously to see if their order shows up or if their worst fears of online shopping - being ripped off - comes true.

One UK-based retailer delivered an ink-cartridge to Germany 40 days after it had withdrawn money from the consumer's credit card.

Some retailers did manage to achieve the perfect scenario, withdrawing the money on the same day as the consumer received the goods.

"That's the way it should be really: 'here is the product, here is your money'," said Mr Nordquist.

Pre-payment by credit card for goods ordered online is widely used, he says, but it becomes "a big problem" when retailers make instant withdrawals without informing the consumer.

The retailer should make it clear under the terms of use that it will withdraw money instantly from their credit card, Mr Nordquist said.

Under the Distance Selling Act, retailers must deliver goods within 30 days, but there is no specific rules preventing long periods between payment by the consumer and delivery of goods.

However, consumer rights advocates in Scandinavian countries have argued that pre-payment for goods online is unfair.

Contracts between buyers and sellers online are presented on a "take it or leave it" basis, Mr Nordquist explained, however if a contract creates an imbalance between two parties, a legal examination might not deem it to be valid.

At the announcement of the ECC survey results, the Director of Consumer Affairs, Ms Carmel Foley, confirmed that her office would be making follow-up inspections on the Irish responses surveyed that breached the information and delivery terms of the Distance Selling Directive.

"Our aim for people doing their buying online is that they would have the same protection, no more or no less, than they would if they went into a normal shop," Ms Foley said.

Distance selling was not the same as picking something off the shelf, handling it, seeing it and smelling it, she said.

"The Distance Selling Act has been in place for two years, so there isn't any excuse for traders not to be compliant."

She said her office had received complaints in relation to cooling-off periods and reimbursements from consumers of Irish e-commerce sites.

One retailer said the company would accept returns, but they wouldn't give a refund for the goods, which Ms Foley described as "a strange interpretation" of the legislation.