Avoid these online shopping pitfalls

There are ways to protect yourself—which might mean shopping in stores instead

Consumer Reports Money Adviser: November 2010

This holiday season you're probably going to do more of your shopping online. Shoppers spent more than $27 billion at online retail sites during the 2009 holiday season, according to comScore, a company based in Reston, Va., that tracks e-commerce. Although it's certainly a more convenient way to buy gifts, you may also face some significant drawbacks, including shipping fees, incorrect or damaged goods that have to be returned, and orders that arrive past the date you needed them.

We've come up with ways you can avoid many of those drawbacks—or at least minimize them—before you click "Checkout" on a website's shopping page.

Fewer consumer rights

Online retailers are more likely to have egregious consumer policies than their walk-in counterparts. Often the gotchas are lurking in the fine print, which can be spread across numerous pages. Common ones are no-return policies or, if returns are allowed, restocking fees that can be from 10 to 20 percent of the purchase price.

But there are lesser-known gotchas, too. For example, virtually every retail site we checked doesn't offer the basic "implied" warranty consumers usually get when they walk into a store. This is an unwritten promise that your purchase will perform as commonly expected and will last a reasonable amount of time.

If you have a disagreement with a Web-based retailer, you might find that the terms and conditions state that you've agreed to have disputes settled by arbitration instead of in court. If you can file a lawsuit, online agreements often require that you do so in the state or locality where the retailer is located, even if it's across the country. You might also find that the sale is subject to the laws in the company's home state, not your own state, where consumer protections might be stronger.

What you can do

Before you shop with an unfamiliar retailer, see whether consumers have had disputes with it by doing a Web search using the retailer's name and words such as "rip-off" and "complaints."

If you decide to buy online, read the customer agreement first to make sure you know the rules that govern your purchase. Courts often uphold a site's terms and conditions even if they're spread across several pages. They're especially likely to be upheld if the site requires you to click a button saying that you accept its policies. If something in the agreement makes you uncomfortable, shop at a walk-in store instead.

Monstrous shipping fees

Sometimes shipping and handling costs can be as much as—or more than—the product itself. That's especially true if you're ordering an inexpensive product, one that's heavy, or one you need quickly.

The Direct Marketing Association says that excessive shipping charges are the main reason customers abandon their virtual shopping carts before buying. Some sites won't even give you an estimate of the charges until you enter your credit-card number or personal information, or otherwise begin checking out.

What you can do

To make sure an online deal is a good one, factor in the shipping charges. Look for retailers that offer free or low-cost shipping, including free return shipping. By searching for the retailer's name and words such as "coupon," "free," and "shipping," you might find a code that's good for a reduction in fees. Websites such as FreeShipping.org offer coupon codes for shipping deals at many major retailers. And some merchants let you buy products online and ship them to your local store free.

You can't kick the tires

There's no way (at least, not yet) to try out products before you buy them, the way you can when you walk into a store. Some sites have salespeople who are available for online chats to help you select products, but sometimes nothing beats in-person assistance, especially if you have lots of questions.

What you can do

Take items you want to try out or try on for a test-spin in a walk-in store. If the store's price is more than the best deal you can find online, ask the salesperson or manager if he will beat it. In a 2009 survey by the Consumer Reports National Research Center, about seven in 10 appliance shoppers who tried haggling for a better deal succeeded, saving about $50 on small appliances and $100 on major ones. If the local retailer won't match your online offer, you can buy it on the Web.

It arrives too late

Most online companies will tell you when you have to place your order to have your purchase arrive before Dec. 25. If you order before the company's deadline but your holiday gifts arrive on Jan. 4, your loved ones might be disappointed—and you'll be more than a little steamed.

What you can do

Under the federal Mail or Telephone Order Merchandise Trade Regulation Rule, retailers must ship ordered merchandise when they promise or, if no promise is made, within 30 days after the order is completed (50 days if you also applied for credit with the retailer).

If they can't meet the deadline, merchants must obtain your permission to delay the shipment. Retailers are allowed to interpret a nonresponse as permission as long as they tell you what they plan to do and give you a new shipping date that's no more than 30 days away. Otherwise, the order must automatically be canceled. If a merchant promises to get an item to you by a particular date, make sure it's in writing, and respond to any requests for a delay.

Limited payment options

You can't use cash for an online purchase, and it's inconvenient, if not impossible, to pay by paper check or money order. Also, sites generally won't let you do a so-called split-tender transaction, using a gift card or gift certificate with a second form of payment, such as a credit card.

Online retailers usually accept debit cards, but they don't give you the same protections as credit cards, such as the right to withhold payment if something goes wrong with the purchase or there's an issue with the quality of the product.

What you can do

Use a credit card when you shop online.

Is that a fair shipping and handling fee?

If an online merchant doesn't follow the Direct Marketing Association's guidelines on shipping and handling fees, it could face a legal complaint or other action from law enforcement. If you think a site is charging excessive or misleading fees, report it to your local consumer protection office. (There's a list of contact information for each state on the Consumer Action website, at www.consumeraction.gov/state.shtml.) Here are some of the rules the association says businesses should follow:

  • Shipping and handling charges should be reasonable and based on actual costs. The charges may include such items as carrier fees and the cost of packing materials and labor.
  • Shipping costs for online purchases should be disclosed clearly and conspicuously, and before the sale is final.
  • When a company offers free products for which a customer pays only shipping and handling, those costs should be disclosed clearly and near the word "free."
  • The term "free shipping" should not be used if the product's price has been inflated to recover shipping costs.

This article appeared in Consumer Reports Money Adviser.


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