Can merchant charge my credit card for an item on back order?

August 31, 2016 15:46 by Consumer Ed

Dear Consumer Ed:

Can a company charge my credit card for the full price of an item that is backordered? I was always told that you legally could not charge someone for something that you did not have in stock and could not charge them until it shipped?

Consumer Ed says:

Despite what you have been told, it is actually not illegal for merchants to charge for a product before it has shipped. However, if your order is not delivered, you are guaranteed a refund under the Federal Trade Commission’s Mail or Telephone Order Merchandise Rule, which requires that your order be shipped within the time stated in company advertising or by phone.  If no specific time is promised, your order must be shipped within 30 days from the merchant’s receiving a "properly completed order" with your name, address and payment by check, money order or authorization to charge an existing credit account.  If the order is not shipped within the promised time, the merchant must notify you of the revised shipping date and give you the option to cancel for a full refund or accept the new shipping date. Since you paid by credit card, the merchant is required to credit your account within one billing cycle. For future reference, had you made the purchase with a debit card (this would also apply to cash, check or money order), the merchant would be required to mail your refund within seven business days. 

However, many credit card issuers have policies against sellers charging a credit card account before shipment. If you think a seller charged your account too soon, report it to the credit card issuer. Otherwise, the issuer has no way to know the seller isn’t following its policies. 

If you are unable to resolve this issue, you can file a complaint with the Federal Trade Commission at www.ftc.gov or with the Georgia Department of Law’s Consumer Protection Unit by visiting www.consumer.ga.gov or by calling 404-651-8600.


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Can online retailer refuse to ship item and then charge a restocking fee?

June 10, 2015 19:20 by Consumer Ed

Dear Consumer Ed: 

I recently purchased a pool cover online.  My credit card was charged immediately.  Two weeks later, without any notification, the company refunded 95% of the purchase price.  When I discovered this, they told me they kept 5% because they don’t ship to where I live. Is that legal?

Consumer Ed says: 

Likely not.  Generally, a company must sell goods as advertised, and have a reasonable supply of those goods available, subject to certain disclosures.  At the very least, a company must disclose any limitations as to the availability of its inventory (including whether it can actually be shipped to a purchaser’s location).  Even though the company selling the pool cover may not be out of stock, the fact that it cannot ship the product to you is a limitation that, had you known of it, you certainly wouldn’t have ordered or paid for the merchandise.  Therefore, this means the limitation was one the company should have disclosed before you completed your transaction.   When you purchase an item over the Internet, it is assumed that the seller will ship the item to you within a specified time, or, if no time is specified, within 30 to 50 days depending on the method of payment.  If shipment is delayed and the seller cannot ship to you within this time—or in your case, cannot ship to you at all—the seller must give you an option to cancel your order and receive a full refund.  Because you paid by credit card, you should receive your refund within one billing cycle for the full amount paid.  This means 100%, not the 95% returned to you.  Had you paid by cash, check or money order, you should have received the refund within 7 business days.

The company may tell you that the 5% it retained covers a restocking fee, or other shipping and handling costs, but you are likely protected. First, any such fees must be displayed clearly and conspicuously on the company’s website, and in a manner that ensures a shopper will see it before the purchase is completed.  If the company didn’t sufficiently disclose these fees, it may be in violation of Georgia’s Fair Business Practices Act. The same could be said if the company knew at the time of your order that it did not ship to your location, and didn’t disclose this on its website.  Even if the company could ship the item to your location, any restocking fees or shipping costs may still be unfair if there is no evidence the company actually attempted to ship the pool cover.  If the seller neither placed an order with a manufacturer, nor took affirmative steps to ship the pool cover to you, then there’s no reason for any costs to be charged to you at all (i.e., if the company’s stock never left, then there’s no reason to charge you to restock it).  For more information, you may want to view our previous Consumer Ed column regarding restocking fees.

If, going forward, you cannot resolve the problem directly with the company, there are several options available to you.  Because you paid with a credit card, you may be able to dispute the remaining charge with your credit card company.  You could also contact the Better Business Bureau to see if they can help mediate a solution between you and the company.  Finally, you can file a complaint with the Federal Trade Commission at ftc.gov, and/or with the Office of Consumer Protection by visiting www.consumer.ga.gov (or by calling 404-651-8600).

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How to tell if an online product review is real or fake

December 3, 2014 15:16 by Consumer Ed

Dear Consumer Ed:

How can I tell if an online review of a product is real or fake?

Consumer Ed says: 

Considering how easy it is for anyone to post an online review for potential customers to see, you’re right to be skeptical about the reliability of online product reviews.  Businesses understand that consumers’ purchase decisions are often swayed by user-generated online reviews.  Unfortunately, this has led some businesses to post positive reviews of their own products or services, and negative reviews of competitors’, while pretending to be real customers.  Other businesses have even incentivized consumers to write fake reviews in return for payment or discounts.  The Federal Trade Commission has tried to minimize fake reviews by imposing fines on those who post and/or pay for fake reviews.  The incentive to fabricate phony critiques remains high because the likelihood of getting caught is still unfortunately low.

This Office has also pursued such parties for this kind of false advertising. However, it is often very difficult to distinguish between a legitimate review and a fraudulent review.  Many sites, like Amazon and Yelp, use multiple methods of analysis to detect fake reviews.  This helps to a degree, but is not foolproof.  However, there are other things you can do to filter through the fake reviews on your own:

Compare reviews not only within a site, but across different websites.  Read a lot of reviews to form an opinion about the site and decide whether it's trustworthy.  Then, compare reviews of the same product on other sites to determine an overall trend of reviews for a product.  You can't necessarily trust a handful of bad reviews or glowing reviews, but trends are much harder to fake.

Compare reviews by the same reviewer. Look at other reviews by the same reviewer to help you decide how much trust to put in the opinions of that person.  Be wary of "one-time" or "first time" reviewers. Reviews by people who are verified by the site are more trustworthy than reviews by anonymous reviewers.  Anonymous reviews are far more suspect than a review that tells you who wrote it with brief biographical information.  Try to verify if the reviewer has actually purchased a product (e.g., an Amazon reviewer’s “Verified Purchaser” status indicates that the review was posted by someone who has actually purchased the product being reviewed through the site).

Be watchful for similar wording on reviews.  Legitimate reviewers usually speak specifically about their individual experience with the product, and discuss things like performance, reliability, and overall value.  So, if the reviews mainly list off product features, or if there are a number of reviews that use similar wording to describe the product, the reviews could be fake.

Be skeptical about "extreme" reviews. 
If a reviewer makes over-the-top, extremely positive or negative comments, that should raise your suspicions.  Generally, most people will list one or two things they liked, along with something they may have been surprised by (whether positively or negatively).  But when the reviewer uses terms like "absolute worst" and "best ever," it’s worth checking out the reviewer before taking what he/she says as the gospel. In general, read reviews less for whether they give a product five stars or one star, and more for the specific information they give about the reviewer’s experience with the product. 

Check the business reputations of all merchants. Organizations such as the Better Business Bureau (www.bbb.org) and agencies such as the Federal Trade Commission (www.ftc.gov) maintain information about at least some reviewers and reviewed products.

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