More shoppers have embraced online group-buying for discounts on products and services ranging from dining and beauty treatments to movie tickets and bus tours, but consumers are cautioned about the prepayment risks involved that can turn the vouchers into worthless scraps of paper.
The group-buying websites, which sell vouchers that offer bargains, provide a platform where consumers sign up for deals that are only activated when a minimum number of sign-ups is reached within a specific time period. Prepayment with credit card or bank transfer is required even before the deal is sealed.
A study by the Consumer Council revealed that the online shoppers can be left vulnerable once the websites fail to pay the merchant and run out of business, as the protection offered to consumers by these websites is scanty.
Most of these websites do not offer warranty or money-back guarantee of any kind in case the website goes out of business. In some cases, the consumers are likely to face higher risks as the exemption clauses imposed by the websites specified clearly that the operators will accept no responsibility for loss caused by inaccurate information or errors.
Since there are no territorial limits to the operation of group-buying websites, and websites accessible to local shoppers may not necessarily have business registration in Hong Kong, consumers may have difficulty getting in touch with the website operator, or in pursuing legal action should problems arise.
Complaint cases related to online group purchases are on the upward trend. In 2009 and 2010, the Council had received 1 and 2 cases respectively, compared to the 11 complaint cases received in the first quarter of 2011.
In one case, a consumer was disappointed that she did not get any confirmation email or voucher after she bought a membership in floral arranging class for HK$199 via a group-buying website. Having difficulty in getting in touch with either the group-buying website or the service provider, she took her case to the Council and eventually got the refund.
In another case, a consumer who planned to take a sight-seeing bus tour on Christmas eve or New Year's day had to call off the plan eventually. The consumer, who bought two tour bus tickets at HK$50 each from a group-buying website, found that the seats on both dates were fully booked. As the tickets expired before he was able to use them, he filed a complaint with the Consumer Council. And the tour bus company eventually agreed to offer a full refund for the purchase.
Meanwhile, the Hong Kong Police had received 623 reports of suspected internet commercial fraud in 2010. Under the existing legislation, all regulations related to crime prevention in the real world are equally applicable to the cyber world.
Consumers are advised to take heed of the following when making online group purchases:
- Evaluate the reliability and credibility of a website before signing up. Some group-buying websites will give refund to consumers for vouchers not redeemed as a result of a merchant closure.
- To ensure online payments are made safely, never use a public computer for online purchases. Make sure the transaction data is encrypted. Choose a payment method that does not require disclosure of your credit card information, or consider using a credit card that has a low credit limit for online transactions if necessary.
- Read the redemption instructions carefully. Some retailers such as restaurants may not entertain use of vouchers on weekends, Sundays and public holidays. Make early arrangement if the deal is time limited, as most company policies state that there will be no refund if the redemption period is expired.
- After the online transaction, log into the membership account, store and print out the transaction summary and redemption letter for personal record.
- Do not buy something you don't really need because it is a bargain. The deal's short run-time often creates an atmosphere that consumers need to make a quick decision.
- In case of behavioral problems such as excessive buying, consumers are recommended to seek help or advice from professionals such as doctors or social workers.
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