Online trading the big consumer issue

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 stores, with online transactions now making up at least 6% of core retail sales, the trade practices regulator says.

Of the 4377 complaints the commission received last year under the Fair Trading Act, a third concered online traders, twice the number generated by physical stores.

The majority of complaints related to domestic online traders, with only 13% involving international traders.

"Commission enforcement options apply to both domestic and international traders, but the practicality of applying these offshore is less effective," the report says.

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% related to either the quality or advertisement of the goods while 24% concerned misleading pricing, including complaints over 'drip pricing', where a headline price failed to include additional charges.

A further 20% of complaints related to the provision of online services while 9% were about non-delivery or the delivery timeframe.

Of the remaining complaints the commission received, 28% concerned contracts and invoices, which were specific to individual traders, rather than indicative of a wider industry behaviour. It says 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% of all the fair trading complaints the commission received concerned in-store trading.

Key sources of complaints were Dead Sea Skincare and Progressive Enterprises. The competition watchdog's 2013 report didn't consider Progressive Enterprises 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%, followed by domestic appliances, electronics and phones at 7%, car traders and sales at 6% and trading banks at 4%.

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)