OFT [UK Office of Fair Trading] to investigate online shopping

[David Farber <dave () farber net>]

Begin forwarded message:

From: Alice Kehoe <akehoe () zen org>
Date: April 30, 2006 11:57:51 AM EDT
To: brendan () zen org, dave () farber net
Subject: OFT [UK Office of Fair Trading] to investigate online shopping


http://technology.guardian.co.uk/print/0,,329467246-117802,00.html

OFT to investigate online shopping as sales boom
· Focus on retail, auctions, air tickets and music
· Customers' security worries to be examined

Simon Bowers
Friday April 28, 2006
Guardian

The Office of Fair Trading is to launch a wide-reaching inquiry into  
online shopping to test levels of consumer protection and confidence  
in the rapidly growing web marketplace, worth about £18bn in Britain,  
or 2.5% of household spending.
The study, to be published in the spring of 2007, will focus on four  
of the most popular areas of online retailing: auction websites,  
airline ticket sales, electrical goods and web music stores,  
including download sites.

The OFT pointed to a recent consumer survey which found 29% of  
shoppers said they were deterred from buying, or never bought, goods  
and services online because of security concerns. Another survey  
suggested a third of online consumers had fears about the state in  
which their purchased goods might arrive, if at all.

Confidence in the delivery process has been undermined by reports of  
scams abusing online payment systems such as eBay's PayPal. There  
have been a number of allegations that auction site sellers have sent  
out goods only for buyers to falsely claim they have not been  
received and demand their payment be blocked. A range of much- 
publicised hoax, or misleading, websites and e-mails have also  
undermined consumer confidence.

John Fingleton, chief executive of the OFT, said: "The internet is  
fast becoming a hugely important channel for consumers and  
businesses. Its rapid evolution means that we need to ensure that the  
consumer protection regime gives current and future users the  
confidence to realise the internet's potential for shopping. This  
study is core to the OFT's mission to make the markets work well for  
consumers."

Whatever the fears of some consumers, however, online retailers have  
continued to increase sales. Retail goods sales alone were last year  
estimated at £8.2bn in Britain, or 3.1% of all retail sales. Adding  
in services such as subscriptions, gambling and pornography,  
government figures valued total UK internet sales for 2004 at £18.1bn  
- up 68% on the previous year. Where online sales accounted for 0.1%  
of the retail trade in 1997, they now have a 3.1% share of the market.

If many shoppers still fear buying online, others have made it part  
of their everyday routine, the OFT noted. Some surveys have found  
typical internet consumers spend £560 a year on the web.

The OFT has already moved to clamp down on specific concerns raised  
by some areas of online retailing. Last month it asked supermarkets  
to clarify their web pricing after complaints that online promotions  
appeared not to have been honoured on the day goods were delivered.  
The watchdog has also clamped down on websites offering misleading or  
outdated flight prices to attract potential customers. Shoppers who  
tried to book at these prices were diverted to less attractive offers.

An OFT spokeswoman stressed no individual companies were under  
investigation in the latest exploratory research, which will seek  
contributions from operators and consumer groups as well as  
conducting a mystery shopping programme. While the OFT has received a  
small and growing number of complaints concerning internet retailers,  
the study has not been prompted by any allegation of anti-competitive  
or illegal practices.

The OFT inquiry will not tackle widely publicised gripes such as  
disparities in music download prices between the US and Britain from  
sites such as iTunes.



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