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Consumer ombud crippled by enforcement challenges in tackling dodgy e-commerce sites proliferating in SA

Consumer ombud crippled by enforcement challenges in tackling dodgy e-commerce sites proliferating in SA
Neesa Moodley
By Neesa Moodley
11 Dec 2022
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In the absence of strong sanctions, it is all too easy for fraudulent suppliers to reinvent themselves by opening new websites under a different name, warns the Consumer Goods and Services Ombud.

As more South Africans get comfortable with shopping online, the Consumer Goods and Services Ombud (CGSO) is having to deal with an increasing number of complaints about fraudulent e-commerce sites.

The CGSO issued a warning last week against Reliable Store, which stocks electronic appliances, computers and accessories, cameras and gaming accessories. Despite its name, the company has proved to be anything but reliable based on the complaints received by the CGSO.

A quarter of all complaints received by the CGSO for the 2021/22 financial year related to e-commerce.

Nollie Maoto, chief data and analytics officer at FNB Merchant Services, says the e-commerce success story has continued in 2022.

“Leading up to the week of Black Friday, e-commerce was already at nearly 90% of 2021 values and volumes,” she says.

But CGSO Magauta Mphahlele says that as e-commerce volumes rise, her office has to deal with an increasing number of complaints about rogue e-commerce sites which deliberately set out to defraud consumers, taking their hard-earned cash before vanishing.

In the past financial year, four such alerts were issued against Mr Shopper, Wiegenkind Boutique, Ana Eleven Brand and Liepies Online. The four companies racked up 535 complaints between them, with Ana Eleven accounting for 399 complaints.

During the current financial year, the CGSO has issued alerts relating to e-commerce sites Sassy Heels, which operates on social media, and PC Link.

Failure to resolve


Between 1 October 2021 and 1 December this year, Mphahlele received 93 complaints about Reliable Store.

The company seems to have followed a formula employed by other e-commerce stores that have been flagged as problematic by the ombud. These companies initially respond to some of the complaints, but then fail to respond to or resolve any further complaints. 

“Most of the complaints received relate to delays in delivering orders, the delivery of incorrect orders to complainants and a general failure to deliver orders,” Mphahlele says. 

“Reliable Store accepts payment from complainants and provides a turnaround time for deliveries. However, they tend to fail to keep up with the stipulated times. When complainants cancel their orders and request refunds, [Reliable Store] fails to refund or takes a long time to do so,” Mphahlele says.



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Lack of enforcement


The biggest problem in dealing with e-commerce complaints seems to be that although identifying transgressions is fairly straightforward, enforcement is another story.

Once all attempts to engage with an errant supplier have been exhausted (a process lasting at least 60 days), or where the supplier has failed to cooperate with the CGSO office to resolve the complaint, Mphahlele is obliged to close the case and issue the complainant with a termination notice, ending the process.

In the case of Reliable Store, 35 termination notices have been issued. Complainants have been advised to escalate their complaints to the National Consumer Commission (NCC). The onus is on the consumer to lodge a fresh complaint with the NCC.

Mphahlele says her office tracks how many consumers elect to lodge their complaints with the NCC. Complainants may choose to go the legal route if the quantum involved warrants it, but they may also simply lose patience with the process and give up.

The NCC plays a crucial enforcement role as it is the only body that can refer matters to the National Consumer Tribunal, which sanctions suppliers and issues fines.

“We continue to flag our inability to make a binding ruling as a policy issue that requires review by the Department of Trade, Industry and Competition,” Mphahlele says. “Unfortunately, in the absence of any sanction, it is all too easy for these suppliers to reinvent themselves by opening new websites under another name.”

Under the Consumer Protection Act (CPA), suppliers are responsible for delivering goods or services on an agreed date and time, or within a reasonable time after concluding a transaction or agreement.

If the supplier fails to deliver as agreed or fails to reach an agreement regarding alternative dates and time, the consumer has the right to cancel the transaction without penalty and to receive a full refund.

PC Link also appeared to contravene another section of the CPA, which prohibits suppliers from directly or indirectly expressing or implying a false, misleading or deceptive representation concerning a material fact about aspects of goods and services. This includes that goods or services are available or can be delivered or performed within a specified time.

“Our office continues to monitor this trend and will not hesitate to name and shame online suppliers who fail to cooperate with our office to resolve complaints,” Mphahlele says.

“We urge all online suppliers to comply with the CPA. We also urge consumers to be vigilant and deal only with reputable online suppliers.” She urges consumers to check whether the online supplier is registered with the CGSO.

“The message is clear: getting the basics right and engaging with customers in an ethical, transparent manner is a competitive advantage in today’s online marketplace,” Mphahlele says. BM/DM

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