Buying online from overseas retailers


If you receive a faulty product, what are your consumer rights in Australia?

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Online shopping fail


While all companies that sell into Australia must comply with the Australian Consumer Law (ACL), the fact is it can be difficult to obtain a remedy when you buy a product online from an overseas seller. The best way to protect yourself is to know your rights and only deal with trustworthy sellers.

In this article:

According to a 2017 NSW Fair Trading survey, nearly 50% of Australians who buy goods from overseas experience problems with these transactions. The main issues are items arriving late, not arriving at all or receiving a product different to the one advertised, and 12.8% of respondents said they had received a faulty product. 

The ACCC received more than 20,000 complaints about consumer guarantees in 2016 and one in five people don't know they have the same rights buying online as in-store, so there's a significant gap between the ACL rules and what happens in practice. 

Crackdown on overseas retailers

The ACCC is cracking down on overseas companies that don't comply with the ACL.

In December 2017, online electronics retailers BXT International (BecexTech) and TCF Global (which operates Techrific and CatchDeal) admitted to contravening the ACL, and provided court-enforceable undertakings to the ACCC. The retailers advertised products like mobile phones and tablets as 'new', when they were actually refurbished. BecexTech was also rebuked for telling consumers that the company isn't bound by the ACL as it's based overseas.

In 2016, US online game retailer Valve was fined $3 million for making false or misleading representations on its distribution platform, Steam, about consumers' rights to refunds for games that were not of acceptable quality.

"These proceedings, and the significant penalties imposed, should send a strong message to all online traders operating overseas that they must comply with the Australian Consumer Law when they sell to Australian consumers," Dr. Michael Schaper said, who was acting chair of the ACCC at the time.

"We will continue to take action to ensure Australian consumers benefit from these Australian Consumer Law guarantees, regardless of whether the business which supplies them is based in Australia or overseas."

Australian Consumer Law: the basics

In order to comply with the ACL, goods must:

  • be of acceptable quality
  • be fit for purpose
  • match the description provided
  • match the sample or demonstration model
  • be supplied with 'undisturbed possession', meaning that no-one can take the goods away or prevent you from using them
  • come with full title and ownership
  • not carry hidden debts or extra charges
  • meet any promises made about performance, condition and quality, such as lifetime guarantees and money back offers
  • have spare parts and repair facilities available for a reasonable time after purchase.

If they don't meet these standards, then you are entitled to a refund, repair, replacement or compensation. What you're entitled to depends on whether the product has a major or minor failure.

Exceptions

Many large retailers like to keep their customers happy so they'll refund you if you change your mind, but they're not legally obliged to. Check with the retailer before assuming you'll get a refund if you change your mind.

Similarly, if the product has failed because you misused it, you can't claim a refund for that failure. So if you drop your mobile phone into the toilet and it stops working, you can't expect the retailer to give you a refund or repair it, since mobile phones aren't designed to withstand being submerged in water.

However, retailers do need to comply with their own policies, so if they say they offer change-of-mind refunds or exchanges, they need to honour that. Make sure you read the fine print carefully so you can exercise your rights!

Returning faulty goods

Generally, if a faulty item can be posted or easily returned, you'll need to cover the initial cost. You don't need the original packaging to get a refund, no matter what the retailer tells you, but you do need to make sure it's adequately protected during shipping. (You may need the original packaging for change-of-mind refunds and exchanges, however.) Keep your receipts – you can recover reasonable shipping costs for faulty products.

If a faulty item is bulky, too expensive to ship or difficult to remove, the supplier must collect it at their own expense, and within a reasonable time. For instance, a supplier must collect items like beds, large TVs, large appliances and products that have been subsequently installed, like a pool pump hooked up to fixed pipes.

If a product you've sent back is found not to have a problem, you may need to pay transport and/or inspection costs, but the seller should provide an estimate of these costs upfront. The seller can't inflate costs to deter you from making a claim.

Again, these rules are all part of the ACL, so in theory any company selling into Australia should comply with them, but in practice, you might have some difficulties.

Tip: If you've paid with PayPal, you can apply for refunds on return shipping, regardless of whether the item was faulty or you just changed your mind. You can claim up to eight Refunded Returns per year, and up to $45 per refund request. There's no additional cost for this, but you do need to register for it at www.paypal.com/webapps/mpp/returns.

How to protect yourself

In short, the best way to protect yourself is to only deal with suppliers you trust and to check up on retailers by searching for online reviews. You can also search complaints registers on consumer protection organisations' websites so you know who to avoid.

Some respondents to NSW Fair Trading's survey said that they either don't shop online at all, or don't buy anything expensive to avoid potential losses, particularly when buying from overseas sellers. As inconvenient as this is, it's probably the lowest-risk approach to shopping online.

Scams

Watch out for fake retailer websites. These look just like genuine online retailers' websites and they can be so convincing that you wouldn't know it's not the real site until it's time to pay. You'll be asked to pay in an unusual way, like using a money order, pre-loaded money card or wire transfer. Whatever you do, don't pay! You'll most likely never see your money again, nor the products you thought you'd bought.

Some scammers operate through platforms like eBay. While eBay offers some consumer protections, scammers may try to lure you into dealing with them outside the platform, claiming that the auction winner has reneged and offering you the item instead. When you pay, you're unlikely to see your money or the item ever again. Classified scams work in similar ways, using classified websites.

Signs you're being scammed include:

  • unrealistically low prices
  • unusual payment requests or methods
  • poor ratings or reviews
  • sellers asking you to operate outside of a safe platform
  • lack of contact information, terms and conditions, privacy or dispute resolution policies.

Pricing: what to look out for

It might sound anal-retentive, but you should carefully check (and double-check, and triple-check…) pricing as you navigate the purchase process and be on the lookout for the below.

  • Drip pricing – small fees and charges are added during the purchase process, until the final price is considerably more than the initial price. Jetstar and Virgin were fined by the ACCC in 2017 for engaging in drip pricing.
  • International transaction fees – you can be stung for international transaction fees by your credit card provider if the merchant's bank is outside Australia, even if you purchased from a site ending in .com.au in Australian dollars. The site probably won't disclose that you'll be charged the fee, so you'll need to check your credit card statements carefully. The only way to avoid this is to use a credit card that doesn't charge international transaction fees, or contact the company directly. Some consumers report that banks refund the fee if you complain.
  • Credit card surcharges – businesses can only charge you what it costs them to process card repayments. Generally the cost to merchants is 0.5% for debit cards, 1–1.5% for credit cards and 2–3% for Amex. Red Balloon was fined for excessive surcharges in 2017.

What to do when things go wrong

Your first step should be to contact the seller directly to try to work out a solution. Make sure you're clear about what your consumer rights are before you make contact.

Other actions that may help:

  • Use the ACCC's complaint letter tool to draft a letter or email to the seller.
  • Ask your bank for a chargeback – a reversal of the charge on your credit card. Time limits apply, so make sure you do this as early as possible. If your request is rejected, you can dispute the decision with the Financial Ombudsman Service (FOS).
  • If you've paid using PayPal or another third-party payment service, you can try lodging a dispute to get a refund.
  • If all else fails, go to the ACCC or your local consumer agency for advice and to lodge a complaint. See our list of useful contacts for details.
  • The International Consumer Protection and Enforcement Network (ICPEN) website (www.icpen.org) provides information on how to resolve cross-border disputes.
  • ICPEN also keeps tabs on international scams and complaints through www.eConsumer.gov, and you can lodge a complaint there.
  • The US Federal Trade Commission's page has an extensive list of consumer protection authorities around the world.
  • CHOICE members can access free assistance through CHOICE Help.

Consumer good news story

A story shared by CHOICE.Community member Val shows what a little knowledge of consumer rights, and some persistence, can achieve.

"I learned my lesson recently when I ordered a knitted jacket online. It appeared to be a US website as the URL ended in .com only and all the prices were in US dollars. US sizing is quite generous so I ordered the largest size which was a women's medium or size 12," says Val.

But when the jacket arrived it was too small – more like a size 8. Val struggled to find returns information on the seller's website, and the only phone number listed was in the UK. She discovered that, while the company had a Sydney distribution centre, it was based in China and she needed to return the item there.

The company offered to refund Val just two-thirds of the purchase price, but she dug her heels in. "I told them that according to our laws here in Australia the goods had to be fit for purpose and this jacket clearly wasn't as it was seriously undersized. I think they don't think our laws apply to them," she says.

After Val threatened to dispute the transaction with PayPal, the company finally refunded the full price, including freight.

Overseas retailers doing the right thing

Some overseas retailers are better at adhering to the ACL than others. We read the fine print on several overseas retailers' returns policies, and these are the ones that comply with the ACL in terms of refunding shipping costs if you need to return a faulty item:

  • Marks & Spencer doesn't charge return shipping costs for faulty or damaged items. Unused products can be returned within 35 days of purchase, and they don't need to be returned in the original packaging, as long as they're securely packaged.
  • Nordstrom refunds postage for faulty products.
  • Next says it will refund postage if a product is faulty.
  • Wiggle refunds return shipping costs (up to $50), and has a 365-day change-of-mind returns policy, with local returns available via Australia Post.
  • Boden Australia has a 'no-quibble' returns policy for three months after purchase (14 days for sale items), and then offers refunds up to the first anniversary of your order arriving if the product doesn't live up to expectations. You can return items to a local address via ParcelPoint and Australia Post, so shipping costs are lower than posting to the UK, despite the items being shipped from there.
  • The Hut refunds postage costs for incorrect, damaged or faulty products.
  • Saks Fifth Avenue will waive the return shipping fee for faulty products.
  • ASOS will refund or replace faulty items (you can decide whether you'd like a refund or an exchange), or will refund you reasonable repair costs. It offers free returns from Australia via Australia Post, Parcel Point or courier pick-up.


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