Buyers beware: Online shopping was consumers’ biggest nemesis in the past year, according to the Consumer Goods and Services Ombudsman (CGSO) in the 2021/2022 annual report

The ombud, an alternative dispute resolution scheme established in terms of section 82(6) of the Consumer Protection Act (CPA), mediates disputes between consumers and suppliers of goods and services, and ensures that subscribers to the scheme comply with the Consumer Goods and Services Industry Code of Conduct.

For the period ending 28 February 2022, the CGSO received 11,834 complaints, an 18% decline from the 14,438 cases it fielded the year before, reflecting pre-Covid levels. This it attributes to the relaxation of lockdown measures and the return to “business-as-usual” due to fewer cancellations in the event and tourism industry, and the fact that “suppliers have, for the most part, ironed out many of the teething problems associated with the initial rush to online shopping in the wake of hard lockdown”.

Of the  11,834 complaints, 2,983 fell out of the CGSO’s jurisdiction and were referred to other ombud offices, regulators and sector-specific alternate dispute resolution entities.

The office also closed 13,946 cases, clearing the backlog from the previous period’s record influx of complaints fuelled by cancellations issues due to the pandemic, and delivery and service malfunctions associated with the unprecedented rise in online shopping due to lockdown.

Termination notices

It also issued 2,176 termination notices, in which consumers were advised to lodge complaints with the National Consumer Commission after the parties failed to settle, or the supplier refused to cooperate.

As a voluntary ombud scheme, the CGSO cannot make binding rulings and it has no enforcement powers, but it can refer cases to the NCC, which in turn decides on referring matters to the Tribunal.

Consumers are required to exhaust other processes by first attempting to resolve their disputes directly with suppliers, before referring the matter to an ombud or provincial consumer protection authority, before approaching the NCC.

The CGSO report showed e-commerce accounted for a quarter of complaints in the 2021/2022 period, down 2% from the previous year.

The office issued four consumer alerts against companies that received payment from consumers, but failed to deliver goods or services, despite numerous complaints raised with them.

These were:

•  Mr Shopper — furniture and electronics;
• Wiegenkind Boutique — baby and maternity wear;
• Ana Eleven Brand — women’s clothing; and
• Liepies Online — women’s clothing, shoes, and accessories.

Sixty percent of complaints were resolved in favour of consumers, who received cash refunds totalling R11.5-million.

Year on year, the number of paid-up industry participants rose from 963 to 1,048, representing a retail footprint of 228 subsidiaries and 21,546 outlets countrywide.

The office also noted receiving complaints relating to civil unrest in parts of Gauteng and KwaZulu-Natal in July 2021, which included cases of goods that were left at suppliers for repairs and subsequently stolen during the looting, or where transport services were cancelled due to the violence and goods were either not delivered, or not delivered on time.

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Online transactions loomed large in this year’s report: the CGSO has published several guidelines for suppliers on how to improve the online experience for customers, as well as tips for consumers on how to protect themselves from rogue operators. But, it said that e-commerce, telecoms and satellite services, retailers and manufacturers of appliances and furniture, continue to generate the most (70%) consumer complaints.

Almost half of the complaints emanated from Gauteng, followed by the Western Cape at 18% and KwaZulu-Natal at 13%.

The R11.5-million recovered during this period includes a refund to a customer who overpaid R84,000 in error with an online subscription payment, a R98,145 online purchase of specialised electronic equipment that the supplier was unable to source, and R104,247.50 refunded to a client after the goods he ordered were not to specification.

Ombudsman Magauta Mphahlele noted that the online shopping trend, sparked by Covid, is here to stay. “While the scammers and fraudsters tend to make the headlines, I would like to commend the vast majority of online suppliers and all our participants who responded positively to rectify customer service failures and uphold the integrity of the sector.”

Inefficiency vs dishonesty

The next biggest sectors in terms of complaints were satellite and telecommunications (17.5%), followed by retail appliances (14%) and furniture (12%). Mphahlele said a distinction must be made between online shopping complaints relating to inefficiencies and poor customer service and those operators deliberately misleading consumers, either through bait marketing or because they are engaged in cyber fraud and other criminal activity.

Currently, online shopping is governed by the CPA and the Electronic Communications and Transactions Act (Ecta). “Cases of cyber fraud involving identity theft, phishing and vishing tend to fall outside our jurisdiction, but we are increasingly dealing with rogue e-commerce sites which deliberately set out to defraud consumers, taking their hard-earned cash and then vanishing.

“In curbing this, we welcome the work done by the Financial Sector Conduct Authority and the Ombudsman for Banking Services in de-licencing rogue financial advisers and helping to educate consumers about online financial scams and resolving related complaints.”

Pre-Christmas scamming season

Citing a report released by TransUnion showing a 4.2% rise in attempted online fraudulent activities year-on-year in South Africa, compared with the global average increase of 3.7%, she warned consumers were most likely to be scammed at the start of the holiday season. “Globally, 17.5% of recorded e-commerce transactions were flagged as suspicious during the pre-Christmas shopping season, while 7.8% of digital transactions in South Africa between 25 to 29 November [encompassing Black Friday and Cyber Monday] were marked as potentially fraudulent.”

According to the Transunion report, 94% of consumers in SA reported concern about falling victim to online fraud during the holiday shopping season.

“In South Africa, the most dangerous day to transact was Sunday, 28 November.”

Since the ombud does not have enforcement powers or the ability to issue binding decisions, its best defence currently is naming and shaming, via social and traditional media — as they did with the four rogue suppliers listed above.

In the period under review, four alerts were issued against Mr Shopper, Wiegenkind Boutique, Ana Eleven Brand, and Liepies Online which racked up 535 complaints between them, with Ana Eleven accounting for 399 complaints.

She warned that the suppliers had all advertised goods at prices too good to be true, failed to deliver, either on time or at all. And when they did respond to customer complaints, the promised refunds never materialised. BM