ComCom lists online trading as the big consumer issue

Thursday 24th September 2015

Online services and transactions attract the most complaints from consumers and pose regulatory challenges, the Commerce Commission says in its annual Consumer Issues report.

Growth in online sales has outpaced growth at traditional bricks-and-mortar outlets, with online transactions now making up at least 6 percent of core retail sales, the trade practices regulator said. Of the 4,377 complaints the commission received under the Fair Trading Act in 2014, a third concered online traders, twice the number generated by physical stores.

The majority of complaints related to domestic online traders, with only 13 percent involving international traders, the regulator said.

"Commission enforcement options apply to both domestic and international traders, but the practicality of applying these offshore is less effective," the report said. Among those challenges are "when an offshore trader refuses to respond to the commission during an investigation or fails to address compliance issues after receiving advice."

The basis of the online trading complaints was evenly split, with 26 percent related to either the quality or advertisement of the goods while 24 percent of online complaints concerned misleading pricing, including complaints over 'drip pricing', where a headline price failed to include additional charges. A further 20 percent of complaints related to the provision of online services while 9 percent related to non-delivery or the delivery timeframe.

Of the remaining complaints the commission received under the Fair Trading Act, 28 percent concerned contracts and invoices, which were specific to individual traders, rather than indicative of a wider industry behaviour. It said the most significant contributor to this was the Auckland Academy of Learning, which had featured on TV3's Campbell Live programme, selling high priced educational software.

Only 14 percent of all the fair trading complaints the commission received in 2014 concerned in-store trading. Key sources of complaints were Dead Sea Skincare and Progressive Enterprises, the commission said. The competition watchdog’s report for 2013 didn’t consider Progressive had engaged in deceptive or misleading behaviour, having received almost 90 complaints from suppliers that led to investigations into potential breaches of the Fair Trading and Commerce Acts.

The four most complained about industries were telecommunications at 9 percent, followed by domestic appliances, electronics and phone at 7 percent, car traders and sales at 6 percent and trading banks at 4 percent, the report said. Within the top 25 most complained about traders, there were five domestic appliance retailers, five telecommunications companies, two group buying sites, two banks and both supermarket chains.

BusinessDesk.co.nz

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