How to protect yourself when buying on the Internet

Introduction

The Internet is growing every day. More and more uses are being found for it, and more and more commercial transactions are taking place over it. While it is easy and popular for Internet surfers to buy goods on-line, buyers should be aware of the dangers involved.

What precautions can I take when buying on-line?

In general you should prefer to buy from larger organisations with already established reputations. Check that the supplier will provide you with adequate contact details, including a phone number and street address. Check their refunding policy, what their freight charges will be, and whether they use a secure payment system.

For more advice, see the checklist suggested by the NZ Ministry of Consumer Affairs at www.consumer-ministry.govt.nz, "Shopping on the Internet".

Protection under NZ consumer legislation

If you buy from a supplier in New Zealand, you will be protected by the CONSUMER GUARANTEES 1993, just as if you had bought the goods from a shop. However, you have no protection if you buy from an overseas trader or if you buy from an individual in New Zealand through an exchange of emails. (See How to exercise your rights under the Consumer Guarantees Act.)

Your protection against misleading or deceptive conduct under the FAIR TRADING ACT 1986 will also apply if you buy from a New Zealand business (see How to: Protection under the Fair Trading Act). While that Act may also apply to overseas companies selling goods or services here, taking action against them is likely to be difficult.

However, even if you are not protected by NZ legislation, you may be able to obtain assistance from consumer agencies in the supplier's home country. The NZ Ministry of Consumer Affairs gives advice and relevant links about this on its website (see above).

Who pays for postage if I return goods to the supplier?

If you bought from a New Zealand business and you return the goods because they are faulty or because they don't match the description given, your protection under the Consumer Guarantees Act entitles you to claim the costs of returning the goods from the seller.

Additional taxes and import duties

If you buy on the Internet from overseas suppliers, you will be subject to the standard customs charges that apply to imported goods. Even items that can be imported without duty will still be subject to GST, which is paid on the cost of the goods and on the freight and insurance costs.

However, if the total revenue that the Customs Service can obtain is less than NZ$50, you will not be required to pay anything. If the goods are not subject to import duty (such as goods made in Australia that qualify for that country's preferential tariff rate) this means that only GST will be charged; GST is currently 12.5 percent, and therefore you will not be required to pay anything unless the value of the goods is over NZ$399. For more information, visit the NZ Customs Service website at www.customs.govt.nz, "Advice on Importing Goods into New Zealand".

Fraud on the Internet

Buying over the Internet is not as safe as shopping at a store, as the Internet gives greater opportunities for fraud. The principal problem, if buying by credit card, is the need to give your credit card details to the advertiser or supplier. You should only do this on-line if the supplier uses a secure payment system; most suppliers will in fact permit you to send your credit card details to them by phone or by fax, or to pay by cheque or money order.

However, if you have paid by credit card, you may be able to get the credit card company to reverse the transaction, depending on the company's policy.

If you are intending to buy from a supplier over the Internet, check that they are not listed on websites that record reports about fraudulent businesses – for example, the site of the US National Fraud Information Centre at www.fraud.org.

Cautionary notes
  • The law in this area is developing rapidly, and may involve the application of existing consumer-protection legislation to the new field of electronic commerce. It may be necessary to consult a lawyer to find out what legal action is open to you if you have a dispute about goods bought on-line.


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