E-commerce complaints rocket as more people shop online

COVID-19 accelerated the trend locally, but online shopping has been gaining traction for some time now. Retailers, restaurants and ride hailing outfits are scrambling to expand their online offerings and the delivery options that support them.

The boom has been good for business and has led to more sales, including for those mom-and-pop shops that suffered most under the pandemic’s pedantic protocols .

According to the Consumer Goods Council of South Africa (CGCSA), which released its annual report for the 2021/2022 financial year on Wednesday, one of the legacies of the Covid-19 pandemic has been the spectacular rise of e-commerce, which saw online sales in South Africa leap by 66% to more than R30 billion between 2019 and 2020.

“Consumers have grown accustomed to the convenience and choice that online shopping represents, and organisations have responded by harnessing the power of technology to enhance the consumer experience, create internal efficiencies, increase market share, boost profits, create jobs and improve customer satisfaction. This is undoubtedly a positive phenomenon and an integral component of the Fourth Industrial Revolution,” it stated.

However, as a natural or a nasty consequence, complaints levelled against online retailers have also gone up.

The CGCSA states in the report that the period under review took place during a particularly challenging period in which many suppliers felt constrained by the economic effects of the Covid-19 pandemic. Consumers were facing an equally difficult time, with many being laid off or having taken a pay cut.

“Additionally, between Covid-related cancellations and the unprecedented rush to online shopping, we were inundated by a record number of complaints that strained our systems.”

Of the 11 834 complaints lodged with the CGCSA during the year under review (roughly 2 600 more complaints than the previous year), complaints about online shopping accounted for 27% of grievances.

In 2019, complaints concerning online transactions accounted for just 4% of all those received by the CGCSA.

Following numerous consumer complaints, the CGCSA issued alerts concerning four online retailers "for accepting payment and then failing or refusing to deliver the goods". These public alerts called on consumers to "exercise extreme caution" when buying from the listed retailers, it stated.

Establishing a stronger relationship with banks is an effort recently appointed chief executive officer Zinhle Tyikwe, says is one of the CGCSA’s focus areas in the near term, especially to make it easier for consumers to report unfair or unlawful transactions.

However, 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, Magauta Mphahlele, the Consumer Goods and

Services Ombudsman, warned.

Given the clear economic and social benefits of e-commerce, it is essential that consumers feel safe and protected online. A predictable legal environment is, therefore, a precondition for future growth in this space. Currently, online shopping is governed by the Consumer Protection Act and the Electronic Communications and Transactions Act. The consumer protection mechanisms contained in both these pieces of legislation go a long way to addressing consumer concerns surrounding e-commerce, Mphahlele said.

“This stable regulatory framework, however, is undermined by gaps in knowledge (by both consumers and suppliers) and challenges with tracking and prosecuting offenders. 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,” she said.

A report released by TransUnion reported a 4.2% rise in attempted online fraudulent activities year on year in South Africa, compared to the global average increase of 3.7%. While many countries saw a drop in online fraud due to tougher measures (Brazil and Kenya, for example, dropped by 37% and 16% respectively), elsewhere digital fraud leapt by double (India 10%) and even triple digits (Chile 740%).

Roshan Jelal, head of fraud at FNB Commercial, said given the advances in technology and the sophisticated nature in which fraudsters operate, fraud detection and prevention has become a standard business practice. Therefore, it has become imperative for businesses and consumers to constantly keep up to date with the latest fraud scams and trends to avoid being victims. “Moreover, most importantly, businesses should invest time, effort, and resources in equipping their employees to detect fraud efficiently and effectively,” he said.

Mphahlele said the authority operates under the regulatory architecture of the Consumer Protection Act, “and because parliament has decided that the consumer is an important part of the way in which our economy can grow, and will grow successfully in the future, we analyse and assist in many ways possible, to ensure consumer issues and tended to effectively and efficiently”.