The European Online Marketplace: Consumer Complaints

The European Online Marketplace:
Consumer Complaints
Bilbao, 23 of September 2005
Fredrik Nordquist ECC Stockholm

European Consumer Centre
• Initiated and party funded by the
European Commission
• ECC offices in 23 countries.
• The task of the ECC is to give advice and
assistance if the consumers encounter
problems when buying products and
services from companies in other EU
member states.
• The aim is that the consumer should feel
as confident when shopping in another
country as he/she does at home.

Fredrik Nordquist
• Senior Administrative Officer/Legal
Adviser at the ECC in Sweden
• Project leader and author of the ECC
e-commerce reports
• Guest lecturer in International b2c
e-commerce law at the Gothenburg
University and at the University of
Strathclyde in Glasgow, Scotland
• Academic background:
LL.M. Master of Information Technology
and Telecom Laws. University of
Strathclyde, Glasgow, Scotland.

ECC e-commerce reports
• 2003: The realities of the European online
marketplace
• 2004: The European Online Marketplace:
Consumer Complaints
• 2005: The European Online Marketplace:
Consumer Complaints 2004

“The realities of the European
Online Marketplace”
Published in June 2003
Shopping project: 114 cross-border
purchases and 262 website checks.
Main problems identified:
• Non-delivery of ordered goods
• No reimbursement if the product was
returned within the cooling-off period
• Many websites lacked necessary
information

The European Online
Marketplace:
Consumer Complaints
• Cross-border E-commerce Complaints and
Disputes reported to the ECC:
• 2003: 590
• 2004: 831
Most common problems
• Delivery: 2003, 41%. 2004, 41%
• Product: 2003, 23%. 2004, 25%
• Price & Payment: 2003, 11%, 2004, 8%

The European Online
Marketplace: 2003 statistics
Country of
webtrader
Country of
consumer
• Germany 31 %
• UK 19 %
• Denmark 8 %
• USA 4 %
• France 4 %
• Sweden 26 %
• Finland 20 %
• Austria 10 %
• Ireland 9 %
• UK 6 %

The European Online
Marketplace: 2004 statistics
Country of
webtrader
Country of
consumer
• Germany 32%
• UK 13 %
• France 9 %
• USA 5 %
• Netherlands 4 %
• (8th. Spain 2,5 %)
• Sweden 27 %
• Finland 20 %
• UK 8 %
• Austria 6 %
• Luxembourg 6 %
• (13th. Spain 2 %)

Type of problems 2004
Delivery 41 %
Product 25 %
Price & Payment 8 %
Redress 7 %
Contract Terms 6 %
Other 13 %

Delivery problems
• Non-delivery of ordered goods
31 % (258 cases during 2004)
• Delayed delivery
5,5 %
• Order only partially delivered
2,1%
• Other problems with delivery
2,4 %

Problems with the product
• Defective
15,7 % (130 cases during 2004)
• Not in conformity with order
5,8 %
• Refusal to sell
1,4 %
• Other problems
2,1 %

Problems with Price & Payment
• Incorrect price
2,8 % (23 cases during 2004)
• Payment arrangements
2 %
• Supplementary charges
1,4 %
• Other price and payment issues
1,8 %

Other common problems
• The withdrawal right during the
Cooling-off period is not respected or is
restricted.
• Guarantees not honoured
• Fraud

Specific topics in the latest ECC
e-commerce report
• Fraud
• Customer Service
• Transatlantic cases

E-commerce Fraud
• E-mail frauds (fake lotteries, phising etc)
• Check overpayment scams
• Internet Auctions frauds
• Fake escrow companies
• Fake webtraders
• Identity theft of legitimate traders

Example of e-commerce fraud.
Simple method 1/3
• Phillip 18 years old from Wales, convicted
to 1 year in prison
• Advertised items on an Internet Auction
site, got paid in advance but never
delivered
• Mocked his victims in e-mails after he had
defrauded them; ”This is my business – I
make people fools”
• The Internet Auction Company didn’t
manage to protect the buyers

Example of e-commerce fraud.
Simple method 2/3
• The fraudster didn’t do any advanced
attempts to hide his real identity.
• Nevertheless, managed to complete at
least 85 frauds before he was arrested.
The total financial damage was at least
45.000 GBP.
• Only 615 GBP remained when he was
arrested. Had spend the money on a
lavish lifestyle

Example of e-commerce fraud.
Simple method 3/3
• Probably even more victims since many
fraud victims are reluctant to report the
crimes.
• Fraudsters with simple and
unsophisticated methods can cause a lot
of damage even if they finally get caught.

Example of e-commerce fraud.
Advanced method 1/3
• The fraudsters steal the identity from a
legitimate company and act in their name
while committing international frauds.
• So far, only small companies in southern
Italy have had their identities stolen.
• The companies that have had their
identity stolen:
- sells home electronic goods,
- do not have any website of their own,
- the staff only speaks their native
language

Example of e-commerce fraud.
Advanced method 2/3
• The fraudster register a domain name in
the legitimate company’s name and
create a website that appears to be
trustworthy.
• The legitimate company’s registration
and VAT number are displayed together
with the real address and telephone
number.
• But the fraudster makes one addition and
it’s a telephone number for ”international
orders” which goes to the fraudsters. The
fraudster also controls the e-mails.

Example of e-commerce fraud.
Advanced method 2/3
• The fraudster place several adverts on
advertising websites once the website
has been completed
• The ”bait” used in the adverts are usually
exclusive mobile phones and plasma TV
• If the buyer tries to check up on the
company through registries, everything
appears to be correct
• The buyers are manipulated to pay in
advance or through a fake escrow
company. But the goods are never
delivered.
• The website disappears after 3-4 weeks
and the fraudsters steals the identity of

Customer Service
• Many e-commerce companies manage to
perform thousands of cross-border B2C
transactions without having any, or at
least very few, complaints reported to the
ECC Network.
• However, there are other companies that
put all their efforts into sales, with little
regard for after-sales service.

Problems with Customer Service
• No response to e-mails or phone calls,
when consumer submit a complaint.
• If they do reply, the responses are
sometimes very late and/or plain rude
• Some sellers just want to get rid of the
complaining customer, instead of actually
trying to help them with their problem.
• Don’t participate in ADR procedures.

Transatlantic cases
• Formally, not a task for the ECC network.
Nevertheless, many complaints are
submitted to the ECC
• 78 % increase of US cases reported to the
ECC during 2004
• ADR possible through econsumer.gov in
some cases

Closing comments
• Consumer are still facing a lot of
problems when shopping online in the EU
• Non-delivery and defective products are
recurring problems
• The increase of frauds is worrying
• These problems are damaging for
consumer confidence, which must be
enhanced in order to realise the full
potential of the European online
marketplace

Thank you for your
attention!
Fredrik Nordquist
+46-(0)8-4290784
fredrik.nordquist@konsumenteuropa.se