Consumers and Contracts

E-Commerce and Online Shopping

Introduction

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 (for example, shopping at a retail outlet). Therefore, when you buy goods or services over the internet from an Australian supplier, Australian consumer protection laws (discussed in this chapter) apply. If the supplier is based overseas, see Overseas purchases and consumer protection laws.

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 or services by credit, for example, credit cards, home loans, personal loans, associated mortgages and leases (see chapter 23 Credit and Finance).

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, PIN or digital signature; and transactions that utilise stored value facilities and digital coins for electronic payment. For a link to a copy of the EFT Code, see Contacts and Links.

How To Protect Yourself when Shopping Online

Before you buy a good or service, you should find out the following information.

Who is the trader?

Establish who is selling the goods or services, including details of the supplier's business: physical address and business registration details (for example, business name, ACN/ABN and contact details.

The Australian Securities & Investments Commission (ASIC) has a free service on its website (<a name='_Hlk201743255'></a>www.asic.gov.au) allowing users to search for registered business names. ACN and ABN of Australian organisations are located at: www.search.asic.gov.au/gns001.html.

What are the details of the transaction?

Knowing the full details of the transaction before entering into an agreement with the supplier will help you to know what to expect if you buy the goods or service. Details you should obtain include:

• a clear description of the goods or service;
• the full cost in Australian dollars of the goods or service being purchased, including costs like delivery, insurance and credit card charges;
• any return, exchange, refund and warranty policy that the supplier has regarding the transaction;
• when you will receive the goods or service;
• the terms of any insurance over the goods or service bought (for example, whether it includes damage of the goods while in transit);
• 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?

Always check for a privacy policy on the trader's website. The policy should outline why the trader collects your personal information and how that information will be used. Traders might want to use your personal information for marketing purposes or even to sell it to third parties such as direct selling organisations. The trader's privacy policy should tell you if this is so. If there is no privacy policy on the trader's website then you should be concerned, because the trader is not informing you of what will happen to any personal information that you submit.

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.

Internet Auctions

Consumer protection laws

Internet auction sites (for example, 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 Australian Consumer Law or its predecessor Trade Practices Act 1974 (Cth)). 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 the some of the consumer guarantees (as discussed in [22.6] above) do not apply when the goods are purchased at an auction.

Before bidding at an internet auction

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 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 will be used.

When making a bid 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.

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 auctioneer or another organisation to protect yourself if something goes wrong.

If something goes wrong

A. Post feedback about the seller on the auction website

Many auction websites have feedback services allowing you to post a comment or ranking about the party who sold you something. This allows subsequent users to be warned about the seller, but will not provide you with any refund or exchange.

B. 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 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 (see below). When making a bid at an internet auction) before you can make a claim with the auctioneer.

C. Make a complaint against the auction website

Although you did not purchase something from the auctioneer, they might have breached your rights as a consumer; for example, if the auctioneer misled or deceived you by making misrepresentations about the auction site's safety regarding fraud.

Purchasing from Overseas

Overseas purchases and consumer protection laws

When you buy goods or services over the internet from an overseas trader, it can be uncertain whether Australian consumer protection laws apply or whether an Australian court has any jurisdiction. The Competition and Consumer Act 2010 (Cth) and the Australian Consumer Law apply to overseas traders carrying on business in Australia, but it is not clear whether this includes sales made over the internet by overseas traders.

If an internet overseas trader is found to have been carrying on business in Australia, then Australian consumer protection laws will apply, even if the contract states otherwise, for example "This contract is governed by the laws of California". If there is no Australian consumer protection (that is, the trader is found not to have been carrying on business in Australia), then only the consumer protection laws of the trader's country (if any) will apply. This may result in your rights being less than if you had purchased the good or service within Australia.

Even if Australian consumer protection laws apply and an Australian court has jurisdiction over an overseas trader, it may be too difficult or too expensive to enforce a judgment against a trader who has no assets in Australia.

Australian Customs Service and GST

When overseas traders supply physical goods to consumers, the Australian Customs Service (ACS) checks the goods in order to decide whether they should be cleared for entry. Imported goods that are prohibited or restricted are seized, and others may require a permit. Imported goods may also be subject to customs duty. The ACS classification of the good, and the country of origin, are relevant in determining the rate of duty payable by the importer (the consumer).

In addition, the ACS levies GST on imports. Low value thresholds apply (A$100). The method of ordering (electronic, phone or mail) does not affect whether GST is payable.

Further tips when purchasing from overseas

Find out from the ACS 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, so always check the delivery charges carefully.

Overseas traders may not list the purchase price in Australian dollars, so you should do the conversion.

Always 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 your bringing an action in case of dispute. It is common practice for an overseas trader to designate the law and courts as being in the country in which the business is located. However, as noted earlier, there is some legal uncertainty in this area.

Internet Scams

Unfortunately, the internet is subject to fraud just like the offline world. Given the nature of the internet, which allows for cross-border transactions to take place, it may be difficult to seek redress if you suffer an online fraud. When shopping online, you should therefore be more aware of scams than when shopping offline.

Your Options when Things Go Wrong

Contact the trader

Contact the trader (in internet auction purchases, the seller) to try to resolve the dispute, via telephone, fax, post or email. Explain the problem and what you want (for example, refund and return). Keep records of all your communications with the trader. It is recommended that you write a letter so that there is a record of your complaint, which can be used if further action is taken. For help in writing a complaint letter, see "Making a Complaint" at www.accc.gov.au/content/index.phtml/itemId/815215.

Contact your payment card provider

If you purchased the good or service with a payment card (for example, credit card, debit card, stored value card), there may be protections for you. For example, some credit cards have a "charge-back" facility (see When making a bid at an internet auction).

Contact an industry body or professional association

Many traders are members of an industry body or association that follows a code of conduct. If the trader at issue is a member, that organisation may be able to help resolve your dispute. Details of Australian industry bodies and professional associations are in the Australian Competition and Consumer Commission's Consumer and Business Directory, available at www.accc.gov.au/content/index.phtml/itemId/8627.

If the trader is based overseas, the relevant consumer protection agency of that country may be able to advise you whether the trader belongs to an appropriate organisation.

Seek help from a consumer protection agency

If the problem is not resolved, contact the Consumer Affairs/Fair Trading agency for the state or territory where the trader is located (see Contacts, Links, Resources and References). If you are in a different state or territory from the trader, you can also contact the Australian Competition and Consumer Commission (ACCC). The ACCC may also be able to help you if the trader is overseas. When dealing with overseas traders you can also visit www.econsumer.gov, a joint project of consumer protection agencies from around the world that provides information for international consumers and facilitates cross-border complaints.

Take legal action

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 trader, and may be very difficult to enforce. Whether you should proceed with legal action depends on the circumstances of your case. Before you do so you should obtain legal advice.