Les Jones

E-commerce > E-commerce Cracks the Top 10 - in Complaints

For the first time, e-commerce moved into the top 10 categories of consumer complaints at the Consumer Federation of America. E-commerce tied with four other categories for seventh through 10th place. The top five categories for complaints were Automobile Sales, Home Improvement, Automotive Repairs, Credit, and Advertising/Telemarketing.

The top five sources of complaints in the e-commerce category were:

1. Merchandise ordered over the Internet
2. Internet Auctions
3. Internet Service Providers (ISP’s)
4. "On-line" Sale of Credit, Loans, and Mortgages
5. Business opportunities: Get rich quick, work-at-home, and multi-level marketing

Only the first category would seem to involve e-tailing, and the description suggests that many of the complaints stemmed from auction and classified ad purchases and sales gone wrong:

Buying products and services online led to complaints about misrepresentation of goods offered for sale, failure to deliver or late delivery of purchases. Some consumers fell victim to elaborate schemes using falsified or stolen certified checks as a method of payment. The perpetrator of these frauds was often in another country or successfully masked their location by a network of contacts.

International fraud is a real problem. At my e-tail operation we set strict rules for international sales based on hard-won experience. We require international customers to provide a FedEx number for shipping charges, provide a tax ID for Customs, and pre-pay the order via wire transfer. We don't accept credit cards for international orders because our credit card provider doesn't allow it. Even if they did, it's a bad idea. There's no economical or effective way to pursue credit card fraud internationally.

We also set a $2,500 minimum order for first-time customers (we mostly sell network security software and hardware for the medium business and enterprise, so $2,500 isn't much of a stretch). Before we set that policy (at the request of the shipping department), we sometimes had to go through hours of paperwork to fulfill an international order for a $20 cable. Some business you don't need.

I see the report as basically good news for legitimate online retailers in that more people are spending money online. There are some bad apples in the world, but they're mostly among the ranks of spammers and auction site grifters, not legitimate online retailers taking credit cards. Awareness of online scams will move more people away from auctions and classifieds and towards established e-tailers.