Shopping online buying guide

With a few precautions, shopping on the internet can be a safe and enjoyable experience.
 
 
 
 
 
  • Updated:10 Jan 2007
 

01 .Introduction

Shopping cart in computer

In brief

By checking an online shop’s terms and conditions, privacy policy, complaints procedures, and whether or not it has a secure checkout, you can minimise the risks of online shopping.

  • If you have problems, being able to contact the retailer is crucial, so always note down the phone number and physical address of an online store before buying.
    Use our Checklist to help avoid hassles when buying online.
  • There’s no doubt online shopping has its risks — it’s hard to know when a company’s trustworthy, you could pay for goods that never arrive, and who knows what happens to the personal information you provide before you buy? But with some simple precautions, shopping online can be relatively trouble-free

Please note: this information was current as of January 2007 but is still a useful guide to today's market.


Where to shop online?

There are different sorts of online stores — each has its advantages and disadvantages.

Online auctions

Online auctions are popular places for trading goods. Almost everything you could possibly think of is for sale, whether you want to sell or buy goods. Register as a user, then away you go.

  • Prices can be much cheaper. Can obtain hard to get items. Can often get "past history" of users to evaluate honesty and trading. For more information read our eBay auctions article.
  • Vendors may not be willing to ship overseas. Vendors are registered with the auction house but aren't official businesses, so risk is higher

Classifieds

Similar to newspaper classifieds.

  • Can locate hard to get or used items. May get good discounts.
  • Traders history is hard to evaluate, so risks are higher.

Comparison sites

Online shopping centres, these gather a number of shopping destinations together in one location.

  • Many stores to choose from and navigating between shops is simplified.
  • May be moved between sites without being told, advertising may determine what sites are available as destinations.

Manufacturers/retailers

Online outlets for small or large stores and manufacturers.

  • Buying direct from the retailer/producer. Often a lot of information available.
  • May not get the best deal.
 
 

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02.Can you trust the retailer?

 

Safe online shopping is all about doing your homework. If you’ve never shopped online, start with recommendations from family and friends, and always try to find out as much as possible about the company before you hand over your credit card details.

If something goes wrong with your purchase, the more information you have, the better off you’ll be. Look for the business’ street address, phone number and ABN (Australian Business Number) if it’s a local site. This tells you it’s a bona fide business.

If you’re unsure about a company’s track record, do some research online.

  • Search for complaints by typing the company’s name, plus ‘complaint’ or ‘problem’ into Google's forums.
  • Check ASIC’s (Australian Securities & Investments Commission) website to confirm whether or not the company exists and if its directors and owners have been banned from running a company.
  • Or, if the website is a registered business, it should be listed with the department of consumer affairs or fair trading in your state or territory.

What about buying abroad?

Consumer law changes from country to country and if you’re shopping using a website not based in Australia, there are other considerations in addition to the usual precautions.

  • If in doubt about your rights, be doubly careful when checking your ‘contract of sale’ — the site’s general policies and terms and conditions — and what consumer protection measures are available.
  • It can be difficult to get assistance when things go wrong with an international purchase. If you have trouble resolving a complaint, contact the relevant consumer affairs organisation in the country where the company is located.
  • Links to consumer organisations can found at www.econsumer.gov.
  • You can use websites such as the National Information Fraud Centre in the US and www.companieshouse.gov.uk in the UK to check the credibility of international businesses.

We usually recommend paying by credit card when shopping online. It's a widely accepted payment method and you shouldn't be liable for unauthorised or fraudulent transactions. The rising concern about online fraud, however, suggests it's not an entirely safe option. So what are the other options - short of never shopping online again?

Always at risk

No matter which payment option you choose to use, there's always some element of risk - online or offline. It's good practice to:

  • Always check your account statements carefully. If a transaction doesn't look familiar, raise the issue with your provider.
  • Only shop at websites that use a secure payment facility indicated by a locked padlock in the right-hand corner and https:// in the address line.
  • Read email from your bank, credit union or a third-party payment service carefully. These organisations don't ask for account details via email.
  • Never tell anyone your passwords or PINs.

Third party payment options

If you're dead against keying in your credit card details every time you shop online, a third-party payment service may suit you. These facilities act as an intermediary between you and the merchant so you don't have to disclose your credit card or bank details to sellers. The drawbacks, however, may include registration fees, transaction charges and a limited number of participating websites.

PayPal (www.paypal.com.au) is an online payment service owned by eBay that allows you to send money to anyone (as long as they have an email address) via the internet. You register with PayPal to setup an account that's linked to your credit card or nominated bank account. To pay for items, log in to your PayPal account and enter the email address of the recipient and the amount you wish to pay. PayPal sends an email notification to the recipient, who then logs into their PayPal account and checks that the money has arrived.

PayPal supports Australian dollar payments (there are more than one million Australian accounts), as well as US dollars, Canadian dollars, euros, pounds sterling and yen. It's one of the safest ways to pay for goods, particularly if you use online auction services.

WARNING:

PayPal is a popular target for online email scams in which fraudsters try to steal your account details in order to access your money. Read all emails purporting to be from PayPal carefully and always type in the website address when accessing your account.

Credit card security blanket

If you prefer to use your credit card, consider registering for the additional authorisation services offered by some credit card providers.

The services from MasterCard (SecureCode) and Visa (Verified by Visa) require you to add a password or secure PIN to your credit card. In addition to entering your credit card number as usual, you'll be prompted for your SecureCode PIN or Verified by Visa password when you're shopping at participating stores. These verify that you're the authorised holder of the credit card. If you don't enter the password or PIN, your transaction won't be finalised.

SecureCode is offered by providers such as the Commonwealth Bank (CBA), National Australia Bank (NAB), St George and ANZ.

Verified by Visa is offered by providers including ANZ, CBA, St George, National Australia Bank and Bank SA.

To find participating stores, look for logos on websites or contact your card issuer.

A similar process of authentification occurs if you use American Express (Amex), but as a cardholder, it's unlikely you'll notice it. Amex merchants can verify transactions by calling Amex. The merchant then checks the card information against Amex files. If necessary, Amex will contact the cardholder to verify the transaction.

04.Extra costs of buying abroad

 

If you’re buying from an overseas website, don’t forget to factor in the extra charges associated with foreign financial transactions, or you might be shocked when you see the final cost on your statement.

Exchange rate

The first thing to calculate is the exchange rate. Some sites may list the US or UK price, probably the most common foreign currencies you’ll use, and the price in Australian dollars. You can also use an online currency converter such as www.xe.com to give you a rough idea of the cost.

Your bank or financial institution will convert the amount into Australian dollars using the exchange rate on the day you made the transaction. Using a formula more complicated than The Da Vinci Code, each bank sets its own rate, although the end result is usually quite similar.

Some online payment services charge users a higher conversion rate than they receive from the banks and skim off the excess. See Do I have other options?, below, for more.

Conversion costs

You’ll also pay a foreign currency conversion fee, which is a percentage of the purchase price. For example, a CD from a UK website that costs £16 will be converted to about $AUD40 and then a conversion fee of, say, 2.5% will add another $1. So the £16 CD actually costs nearly $41.

It may seem like a small figure, but it can quickly add up if you’re making large or multiple purchases. You should also consider overseas delivery costs. Some sites may give postage discounts or even wipe the costs all together, but you may need to spend hundreds of dollars to qualify.

We’ve listed the foreign currency conversion fees for the most popular credit cards with seven major banks. The fees range from 1.5-2.6%, although a few Westpac cards go up to 3%. Some Gold or Platinum cards, with a higher spending limit and extras such as free travel insurance, often have a higher conversion fee. They’re more likely to be used for foreign currency purchases and could be costing you more without realising it.

If you regularly shop online, it’s worth checking with your bank or financial institution about the conversion rate — it may be more relevant than the interest rate, especially if you pay the balance in full each month.

Bank Credit card Currency conversion %
ANZ Bank Visa 2.5
ANZ Bank Mastercard 2.5
BankWest Visa 2
BankWest Mastercard 2
Bendigo Bank Visa 2
Bendigo Bank Mastercard 2
Commonwealth Bank (a) Visa 2.45
Commonwealth Bank (a) Mastercard 2.5
NAB American Express 1.5
NAB Visa 1.5
NAB Mastercard 1.5
St George Bank Visa 2.5
St George Bank Mastercard 2.5
Westpac (b) Mastercard (c) 2.5
Westpac (b) Visa (d) 2.5

Table notes

(a) All Commonwealth Bank foreign currency transactions fees are now called international transaction fees.
(b) Other cards vary from 1.1—3%.
(c) Includes Gold, Low Rate, 55 Free Days and No Annual Fee Mastercards.
(d) Includes Gold, Student, 55 Free Days and Low Rate Visa cards.
Source: www.cannex.com.au August 2006

Do I have other options?

Third-party payment services, such as PayPal, allow you to send money to anybody with an email address (see Payment options). However, you’ll need to provide credit card and bank account details to set up an account. The foreign currency conversion fee is calculated at 2.5% of the purchase price and added to the exchange rate is set by PayPal. You’ll also pay to receive and withdraw funds — the fees vary depending on the type of account and the balance.

Other online payment services include Paymate and Technocash, which offer several ways to transfer money to overseas accounts online.

You can also transfer money online using a credit card with Western Union; however, we don’t recommend you use it to transfer money to people you don’t know. It’s also pretty expensive — for example, a $25 payment to the UK will incur an additional charge of $20 in transfer fees. And watch the details! Western Union sets the exchange rate and any difference between the rate given to customers and the rate received by Western Union is pocketed by the company.

When you’re confident you’ve found a trustworthy site and you’re ready to buy:

  • Check the description of the product, price — including delivery costs, currency and taxes — and warranty details. Good shopping sites should give you the opportunity to confirm or reject your order before you pay for it.
  • Choose a payment method — credit card, cheque, money order, Bpay etc. In most cases it’s safest to pay by credit card — Visa, MasterCard, Diners Club and America Express all have chargeback schemes and won’t hold you liable for undelivered goods or unauthorised transactions. Check the exact terms and conditions of your credit card as schemes can vary, however.
  • Confirm the site has a secure checkout— Secure Sockets Layer (SSL) software is the most common technology used to secure shopping sites. It encrypts or scrambles your personal information as it travels over the web.
    When you move to a secure web page, you might see a pop-up dialogue box — click OK if you’re happy to proceed.
    If you don’t get the pop-up, you can tell if a website has secure shopping facilities by looking for a locked padlock on the bottom righthand side of your browser’s status bar or by checking the beginning of the web address — it should begin with https:// instead of the normal http://.
  • Look for websites which use 128-bit encryption. You’ll often find this information on the site’s FAQs or ‘About us’ pages.
    Other less common security protocols include Transport Layer Security (TLS) and Secure Electronic Transaction (SET). Some sites also offer online authentication services, such as Verified by Visa and MasterCard’s SecureCode, which verify your identity through your bank before processing the transaction. In other cases you may also have the option of paying over the phone or by fax.
  • Check where your details will be stored later — some online businesses store them on a secure server or destroy them once the transaction has been processed.

Delivery problems

Delivery problems are one of the most common complaints reported by online shoppers — your purchase may take weeks to turn up, arrive damaged or not arrive at all.

As a precaution, try to make sure your item is in stock and check the expected delivery time before completing your transaction. Most good retailers will notify you via email when your order has been received as well as when the item has been shipped or if there are problems or hold-ups.

  • Late delivery
    If your item doesn’t arrive on time, contact the retailer to check the status of your order and, if you’re planning to cancel it, find out whether they’ve already charged you for the purchase — some companies process your payment even before the item has been shipped. You should be entitled to a refund.
  • No delivery
    If your product never arrives, put your complaint in writing and try contacting the retailer more directly — by telephone or in person if necessary. Have the details of your order handy and remember, you’re entitled to a refund. If problems continue, file a complaint with the department of fair trading or consumer protection in your state or territory and inform your credit card provider.

06.Read the fine print

 

While standard consumer rights apply to most items bought over the internet (except goods auctioned online), it can be difficult to achieve redress in the virtual world — taking precautions early on can save you hassle down the track.

Before making a purchase, check all the terms and conditions including:

  • delivery costs
  • if your item’s in stock
  • whether you’re entitled to refunds or repairs
  • if the company accepts returns and cancellations

Find out how a company handles complaints or disputes — reputable online retailers often have processes to solve problems quickly. If you’re not confident there’s a clear procedure to follow, look for another retailer.

Maintaining your privacy

It pays to check the privacy policy of all websites you visit, even those that aren’t shopping sites. Many websites collect information about you and your surfing habits using cookies — small files which store information such as your IP address (the number that’s used to identify your computer on the internet) and the login name and password you use for that site.

If you have to provide personal details in order to access a site or make a purchase, think carefully about the information you give away. In most cases, you don’t have to fill in every field — mandatory ones are usually indicated with an asterick.

In particular, avoid revealing personal information, such as your mother’s maiden name, which can be used in combination with other details to access bank accounts by phone, or your home email address, which can be harvested by spammers.

Always check what the company plans to do with your information — you don’t want your personal details sold to unknown third parties.

If you plan to use your credit card online, check what the company does with your banking details after you’ve made a purchase. To protect your privacy some sites destroy credit card information once an item has been dispatched.

Make sure you have security software on your computer and that it's up-to-date.

Keeping track

For the same reasons you keep receipts and invoices in the real world, it’s important to keep track of online transactions. A good website should send you an email confirmation of your transaction as well as provide the opportunity to print your order. For future reference we recommend keeping a hardcopy record of all correspondence with retailers as well as a copy of the returns policy that’s current at the time of ordering.

Make sure you ask the following questions when buying online.

Who am I dealing with?

Information about the trader should be clear. You should have either email or phone contact details, and be able to check on its reliability.

How much is it going to cost me?

The price should be clearly displayed and include all costs -- look for information about delivery charges, taxes and currency conversion.

What am I buying?

You should be able to easily identify the product. This is especially important online because you often can't see the goods themselves.

Is there stock available?

Stock availability should be clearly displayed.

What delivery methods are available? Are there different options for delivery methods and prices? Will they deliver to my country?

You should be provided with information about options and prices for different delivery methods.

How do I know when I've confirmed my order?

There should be a clearly defined ordering process for you to follow. You should also receive a receipt of the order, either by email or in the post.

How can I pay for my purchase?

Payment options available should be clearly displayed. Expect the majority to accept credit card, with some stores accepting non-internet payment, debit card or Cash On Delivery.

What personal information are they asking for? What will they do with it?

Only information needed for purchase should be requested. If you're asked for personal information, there should be an explanation of how the information will be used, and who it will be given to.

Where can I complain if something goes wrong?

Contact the online store by phone. If your calls are ignored, write a letter outlining the issue and what will resolve the matter, for example request a refund or replacement product. If you don't get a reply, get advice from your local fair trading/consumer affairs authority.

How long will it take to get my goods?

Check for a stated target time for delivery, and that you'll receive an email to tell you when it's been dispatched.

I've got my goods, now what?

Your purchase should arrive in good condition, with an invoice and an explanation of how to return the product.

When do I pay?

Your account shouldn't be debited before you receive the goods. The amount you pay should be that stated when you ordered, with allowances for any currency conversion.

What if I don't like the product, or it's faulty?

The returns procedure should be easy to follow, with clear indications of the steps involved, and who to contact if the returns procedure fails.

How much is it going to cost to return goods?

Any extra costs should be specified in the returns policy, so check before you finalise your purchase. There should be no additional costs involved in returning goods other than those specified.

Can I get a refund?

Most of the time, there should be no problems obtaining a refund. It should be just like regular shopping, provided you have the physical address of the trader. It's a lot harder to chase up a virtual shop through Consumer Affairs. There are also some legal questions which may make getting a refund more complicated if you shop overseas.

For further help