Scammers: are online retailers being victimised? June 20, 2013 20:45
Let me start off by saying that I commend and congratulate the ACCC for its many initiatives aimed at protecting consumers from the ever-present danger of online scams.
As a peak industry body, the National Online Retailers Association (NORA) is committed to contributing in anyway it can to this cause, to participate in education and policy development with regulators and law enforcement and so protecting Australian consumers. After all, the new retail in Australia has a strong online footprint, and we want Australian shoppers to have a great experience shopping online. The fact that this channel is growing so quickly means – in many cases – they already are.
I was pleased to join a panel discussion in Melbourne on Tuesday, June 18, at the ACCC’s conference: Outsmarting Scammers, Staying Safe When Shopping Online.
As the day and progressed, I made two keen observations to the Commission: firstly, that the real ‘problem’ for Australian consumers it would seem, was originating not from online retailers, but rather from online marketplaces. It was clear from the data that the majority of scams have their origins at marketplaces including eBay, CarSales, RSVP, Gumtree, Trading Post and the like.
Now, I am not out to disrespect these marketplaces, they are outstanding facilitators of trade and commerce, and their trust and safety executives work tirelessly to stamp out scams. Rather, I am clarifying that ‘online retail’, the core constituents that NORA represents, is doing the right thing by customers. I see marketplaces as a core pillar of the new retail, but they are not ‘shops’, they are ‘shopping centres’, and in my view need their own industry association to ensure best practice and raises standards.
Personally, I am surprised they don’t already have one and I urge these organisations to consider incorporating one. The trust and safety executives who attended from eBay, CarSales, QuickSales, Gumtree and Trading Post all indicated a willingness to work together to stamp out scams.
The second key point I made on the day, and continue to make, is that online retailers are often the key victims in card-not-present scams. To clarify; if a consumers credit card gets compromised and their card is used to purchase goods fraudulently from an online retailer, invariably the chargeback mechanisms ensure they get their money back. So far so good.
We all agree that the Australian consumer is our first priority, so it makes sense that they receive recompense in full. But what happens to the retailer who has shipped the goods, in good faith, to the scammer or their mules? Well, the retailer cops the chargeback against their merchant takings for the day. Often this is a very unpleasant and expensive debit, and in most cases, unanticipated and unexpected.
My point here is simply this: what do the card issuers, the card issuing banks, and the payment processors lose? The simple answer is nothing, despite the obvious inconvenience and costs associated with investigating fraudulent transactions.
It seems clear to NORA and its board that the card issuers and their stakeholders are going to be obliged to have more skin in the game to ensure that a concerted effort is made to protect online retailers from this threat. After all, it is online retailers who are paying sizeable merchant fees and really are important funders of the card paying ecosystem.
Lastly, on to the hot topic of group buying. The Commissioner again flagged that the ACCC are having a close look at these businesses due to the number of complaints from Australian consumers around this fast changing space.
Again, allow me to say that I am a supporter of this exciting model, but would again question if these businesses are actually retailers. In most cases they are ‘introducing’ services and sometimes products, on behalf of other vendors. I would again venture that these are marketing, media or marketplace models. They have their own association and code of conduct, and complaints are monitored by ADMA, the Australian Digital Marketing Association. Again I would caution against online retailers being lumped in with this group.
So, how do we define online retail?
We might have to go back to the old fashioned definition of retail: businesses buying things and selling them, and making (hopefully!) a profit in the middle. What do you think?