Finland's Consumer Agency Calls for Additional Secure Means of Payment in eCommerce

the eFinland Weblog

Helsinki, 9 March, 2006 — Means of payment that provide an alternative to advance payments are needed in e-commerce. From a company’s point of view, advance payments are a safe way of guaranteeing that payment is received from a customer and losses prevented, but from the consumer’s point of view the situation involves a greater vulnerability to risk. A product that has been ordered and paid for in advance may not necessarily ever arrive, or else it may be defective in some way or other. In both cases it may be difficult for the consumer to get his or her money back.

Advance payments do not cause problems when one does business with companies that act responsibly. However, swindlers who deliberately act illegally are to be found among Internet-based traders. The Consumer Agency reminds consumers that it is inadvisable to send money to an unknown address without ensuring that the company in question really exists. The minimum requirement is that the name and postal address of the company be stated on the web site. It is unwise to do business with merely an Internet address or a post office box number. You can also check the contact particulars to see whether they are correct before placing an order. In addition, you can test the general reliability of an online business by using the tools available on the Consumer Agency’s web site at the address: www.kuluttajavirasto.fi/verkkokauppa/

The Consumer Agency requires that advance payment must not be the only alternative in e-commerce; in addition to it, consumers must be offered the option of using other means of payment. Companies could, for example, develop payment arrangements in which a transaction mediator is involved in addition to buyer and seller. In systems like these the buyer makes payment for the purchase first to the mediator, who forwards it to the seller only when the buyer has accepted the product.

A lack of arrangements for post-delivery payment became clearly evident in the course of a campaign in which the Consumer Agency inspected 84 e-commerce web sites in late February. The sites were maintained by businesses selling products that included discs, books, information technology, clothes and games. Only 18 sites offered the opportunity to pay for purchases after delivery. The modes of payment used by the others were postal COD, bank online payment, bank transfer (giro) or credit card. In addition, only 23 e-businesses provided information on how consumers who cancelled orders could get their money back. The only one of these alternatives with which consumers can, in some cases, get their money back when problems arise is a credit card.

Most of the e-businesses examined also had other problems associated with them. Among other things, several sites provided inadequate information about terms of delivery and security of payment and the information provided in relation to the right of cancellation was either incorrect or illegal. Only one-third of the sites highlighted the special position of minors, for example by pointing out that a minor needs the consent of a parent or guardian to make a purchase, and only two sites provided real means of checking this. These shortcomings combined with advance payment mean that it is the consumer who bears most of the risks and therefore there is no fair sharing of responsibility between company and consumer.

The Consumer Agency is sending the e-businesses involved a reprimand pointing out the shortcomings and unclarities identified on their sites. The inspection of e-businesses was a part of International Internet Sweep Day, in the course of which oversight authorities in countries belonging to the Icpen network conduct a coordinated survey of Internet marketing that violates consumer protection. It was also a part of a campaign conducted by the Consumer Agency in February and March to draw attention to international swindles.

Additional information:
Attorney Miina Ojajärvi
tel. + 358 (0)9 7726 7528

More information
miina.ojajarvi@kuluttajavirasto.fi