Although the Australian Bureau of Statistics releases regular findings on population growth and employment rates, the most recent online shopping information seems to be dated June 06. The archive figures show a definite increase in online internet usage between 2004 and 2006, with 70% of Australians over 14 using the internet in the last month, although the primary online activities were email, general surfing and product research. Shopping and selling online did increase from 41% to 64% over that period, with the income from online businesses increasing by 19% from 2004 to 2005.

The Australian Retailers Association provides more recent information, although the latest figures were not positive. The media release for 17 June 2008 was headed “retail profits plummet as shoppers stop spending”. 10% of retailers reported a decrease in profitability over the last quarter, despite 35% indicating that they increased prices over the period, although that covers online and offline retailers.

The Norton Online Living Report (in their first bi-annual report at norton.com/onlineliving) states that 76% of online adults had purchased something online at some time. Mind you this was from a survey of 4687 adults from eight countries, and extrapolated. Around 55% of Australians have a high degree of confidence online, with around a third feeling confident sharing personal information when shopping online. The majority have security software on their computers, with basic precautions such as changing passwords, using multiple email addresses and staying on trusted sites.

Hitwise has recent data about Australian internet usage, grouped by category. Their May 08 report says that top searches driving traffic to shopping sites online were ebay, trading post, ticketek, harvey norman, everyday rewards (Woolworths), amazon and target.

Google.com/trends searches for “online shopping australia” show that volumes have been relatively consistant over the past few years, apart from seasonal peaks leading up to Christmas.

Verisign is a global provider of infrastructure to communicate and conduct commerce with confidence, with digital certificates protecting over a million servers worldwide. From the Verisign site (courtesy of data from Ipsos-Insight), 69% of online shoppers are concerned about online credit card fraud, 85% concerned about identity theft, and 37% believe that online shopping is a risk factor for identity theft. Displaying a trust logo on a site is felt to be important by 94% of Australian online shoppers. The majority of shoppers prefer to use sites that display the Verisign Secured Seal.

Newspapers frequently have generic articles about the increase in online shopping. With the increase in petrol prices, and the ability to compare prices online to find the best bargain, avoiding crowds and queues, and the ability to find unusual gifts, it is easy to understand why people are interested in shopping online. New online shops are starting up all the time. The increased competition does lead to more benefits to shoppers, such as free gift wrapping and delivery.

If you are just starting out at shopping online, here are some useful tips:

1. Look for a trust logo, such as Verisign, to verify site authenticity

2. Check refund, privacy, returns, guarantees and delivery costs

3. Check reputation at shopping review sites that allow ratings and comments, such as www.myonlineshops.com.au

4. Pay by credit card, possibly having a separate credit card with a low limit, specifically for online use

5. Ensure capture of personal and credit details are secure. The address of the page should start with https, and there should be an icon of a padlock on the bottom of the screen

6. Print a copy of the receipt and also save a screen print of the receipt

7. If you have problems getting a refund, visit www.fairtrading.nsw.gov.au/shopping/shoppingfromhome/internetshopping.html

Penny Naim is an avid online shopper, and online researcher. Discover a huge range of quality Australian shops, rate and write reviews about Online Shopping Australia at www.myonlineshops.com.au.

Sydney businessman Ian Brookfield used his Commonwealth Bank Platinum MasterCard to pay a $150,000 deposit for a $550,000 boat in March last year.

The boat builder, Sunseeker, failed before the boat was finished. Sunseeker went into administration and had receivers appointed late last year.

Brookfield sought to use the card’s chargeback facility (reversing a transaction when there is a dispute with a merchant, typically when goods or services are paid for but not supplied) to get his money back.

The CBA lodged a chargeback request on his behalf in March with National Australia Bank, Sunseeker’s bank.

The request was knocked back, as was a second one, put through in June.

Brookfield’s case highlights the problems consumers have in understanding chargeback rules, dealing with financial institutions and getting consistent treatment.

A couple of cases cited by the Financial Ombudsman Service (FOS) in a recent report also illustrate the uncertainty about chargeback rules.

Credit and debit card issuers say chargebacks make for a more secure transaction. They are also used to correct duplicate billing, to fix a bank processing error and to deal with fraud.

The CBA wrote to Brookfield in July, telling him NAB had declined the request because it was “out of time”.

Card issuers set a time limit for chargeback applications of 30 to 75 days. The limit may apply from the date of the transaction or the agreed delivery date.

When Brookfield paid his deposit, the contract was to be finalised in December. He received notice from the receivers that the contract would be completed and he could take delivery of the boat.

Brookfield says the boat offered was deficient in a number of ways, including no warranty.

He says: “There was still about $40,000 of work to be done on the boat. And with no warranty, my financier would not settle.”

Brookfield is now in dispute with CBA, arguing its statements about chargebacks are misleading and it has a responsibility to credit his account for the $150,000.

He also claims the CBA mishandled the first chargeback application because it had assumed there was no set date for delivery of the boat, which would affect the chargeback timeframe applied by NAB.

Brookfield says his contract with Sunseeker had a completion date of December 12 and the bank should have been aware of that. He says the fact it did not include that information in his first application hurt his chances of a refund.

The CBA wrote to Brookfield in July, saying the bank had lodged a chargeback as requested and there was no obligation under chargeback rules to credit the customer’s account. The outcome of the chargeback application is in the hands of the merchant’s bank. Brookfield is also in dispute with NAB, which contends he was offered a finished boat and did not complete the transaction. He is arguing the boat was not completed to the terms of the contract.

NAB engaged Freehills to look into the matter and, on August 18, Freehills partner Peter Smith wrote to Brookfield with a response on the bank’s behalf. The bank rejects Brookfield’s claim that the terms of the contract were not fulfilled. It also points out that Brookfield had sought to buy the boat at a discount from the receiver, offering $170,000 on top of the $150,000 already paid.

CBA and NAB declined to comment on the case.

Whatever the merits of the different claims, Brookfield’s case suggests the chargeback system is not as clear as card issuers claim and consumers are not aware of the rules.

It can be difficult to negotiate settlements when consumers have to communicate with their own banks but the ultimate decision is with the merchant’s bank.

Brookfield is not alone, as a report by the FOS shows. In one case cited by the FOS, the consumer made a $1500 payment using a MasterCard credit card to join a travel club. The person then had a change of mind and used the 14-day cooling off period to ask for a refund. When the travel club failed to pay the refund (and later “disappeared”), the person contacted his bank to have the transaction reversed.

The bank said because the person had participated in the transaction, the chargeback could not go ahead as an unauthorised payment. For the transaction to be reversed, the bank would need to see a credit voucher from the travel club. Even when it was clear the club no longer operated, the bank maintained the same position.

The ombudsman’s view was that because the consumer had cancelled the contract, the bank should have taken into account that the travel club had a legal obligation to issue a credit voucher. In the end the bank coughed up the $1500.

How the system works

A typical chargeback situation arises when goods are paid for using a credit or debit card and are not delivered.

If that happens, you notify the institution that issued the card. The issuer will investigate the case and when it is satisfied you are entitled to reverse the transaction, it will credit your account. It can take a few weeks to get the money back.

Behind the scenes, the bank that issued the card will then chase the merchant’s bank to recover that money. Ultimately, it is the merchant’s bank that has to make good on the failed transaction.

John Kavanagh
Sydney Morning Herald

Repaying money owed on credit cards should be the first step in getting on a firm financial footing, it has been suggested.

Indeed, Tammy May, director of MyBudget, points out that deciding which debts to prioritise can be an area of difficulty for many people. However, she tells News Limited newspapers that repaying the likes of credit cards and personal loans should be an area of focus for borrowers, as should other forms of high-interest debts.

“If you have a personal loan with a high interest rate you are looking to pay off, make sure you will not incur any penalties for doing this,” she adds.

Such Australian banking advice comes as Kevin Benger, chief executive of credit union Community CPS Australia, states that high-interest debts are typically the hardest for people to control.

“Credit cards, store cards and mobile phone accounts are the big ones that most people generally don’t control well, so get rid of them if you can,” he tells the publication.

Meanwhile, merging debts owed across a number of sources could help people to keep an eye on how much they owe, as Mr Benger recommended that no more than a maximum of two credit cards are held at any one time.

“Any more than that can be a recipe for disaster,” he states, with the seeking out of a 0% balance credit card deal one possible way to consolidate multiple debts.

However, he points out that people should avoid be wary of special offers on credit cards and other products as “nothing comes without a cost”.

His guidance comes as the publication states that unemployment figures and interest rates are set to increase, placing more pressure on consumers in the months to come.

Mr Benger’s guidance on repaying debts and tips for saving could be especially useful as recent Reserve Bank figures showed credit card spending rose by a tenth over the course of June, with the typical debt standing at $3,127.05 per card.

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