Legal responsibilities for eBay sellers

LegalVision

12th Apr 2016

By Anthony Lieu

As more retailers and consumers take advantage of online marketplaces such as eBay and Amazon, the application of consumer protection laws becomes increasingly complex. It is important for eBay sellers to become familiar with the consumer laws and policies that affect them, not only in the interests of their consumers, but also to help them build a reputable brand.

eBay’s platform has attracted more than 162 million active users worldwide, with an estimated value of more than $20 billion in goods sold and bought through the site annually. If you are an online retailer using a marketplace platform to start or grow your business, it’s important that you are aware of the Australian consumer laws at play and how to comply with them.

Online auctions/marketplaces
eBay is what is known as an online or ‘virtual’ marketplace, in which individual buyers and sellers can interact directly with one another, on a platform owned and operated by a third party business. eBay’s auction process is different from a traditional auction in which the auctioneer is usually an agent for the seller. eBay, and other marketplace websites of its kind, are not directly involved in the auction process and may not be an agent for the seller. eBay itself never actually takes physical possession of items sold or monies paid on its platform – rather, it merely facilitates the auction and exchange of goods. This means that eBay technically does not attract direct liability for the process of people exchanging goods using its website (although it does have a dispute resolution centre). It generally falls upon individual buyers to exercise their consumer rights and on sellers to provide appropriate recourse when using eBay.

The consumer guarantees
The first thing any Australian retailer should familiarise itself with is the Consumer Guarantees regime. The Consumer Guarantees are a set of fundamental protections laid out in the Australian Consumer Law. These guarantees apply to traditional retail as well as to any products or services purchased and sold online. Some of the guarantees include:

• That goods are of acceptable quality;
• That goods will be reasonably fit for any disclosed purpose;
• That goods correspond to any description provided; and
• That express warranties will be complied with.

For more information about Consumer Guarantees, check out the website of the Australian Competition and Consumer Commission (ACCC):  If you sell second hand goods, the consumer guarantees may also apply. Read our piece here.

If you are selling goods as a business, then you are required to comply with the Consumer Guarantees when selling goods in Australia. eBay also requires sellers to specify a returns and refunds policy, suggesting sellers offer a buyer-friendly policy.

Returns and refunds policy
Despite the fact that eBay operates as a mere facilitator of online retail, it gives comprehensive advice to consumers on their rights and how to gain recourse for any breaches of consumer laws. A key element is how consumers can return an item, request a refund, repair or replacement. Under eBay’s policies, all sellers on its platform must have their own returns policy and provide easy-to-use systems for buyers to get in contact to request a return or refund. If the retailer is unresponsive, buyers can request that eBay step in to help secure a full refund, under their ‘Money Back Guarantee’ if eligible. This guarantee covers eligible purchases on eBay paid with PayPal​ or a credit card through checkout.

Creating your own returns policy
One of the challenges for online retailers, especially on popular websites such as eBay, is establishing yourself as a reputable and trustworthy brand in order to set yourself apart from competitors and attract people to your products. Although for many of us it’s common knowledge, the Australian consumer watchdog, the ACCC, advises consumers to be wary when purchasing goods online – as cases of fraud, misrepresentation and scams are ever-present and on the rise. If you are out to set up your business or brand using eBay, it is important to show consumers that you are serious about complying with relevant consumer laws. One way you can do this is by creating your own returns policy.

A well drafted refund and returns policy should cover:

• Your obligations under the Australian Consumer Law;
• How customers can return items or request a refund;
• Whether or not you will be providing refunds for a change of mind;
• What you consider to be a ‘reasonable time’ to request a refund/return; and
• The method of refunding payment.

Jurisdictional issues and cross border claims
While Australia’s consumer laws afford a great deal of protection to consumers, many other jurisdictions worldwide have a more relaxed approach or have different laws and remedies altogether. As eBay attracts users from around the world, it can often be difficult to enforce the Australian Consumer Guarantees in other jurisdictions. This makes individual returns and refunds policies on eBay more important, as they will often be the first port of call for resolving a request for a refund.

What to do if you encounter problems with a buyer
There’s an old rule that the customer is always right. But a retailer might need to break this rule if a buyer is taking advantage of the Consumer Guarantees or your own refunds policy by requesting a refund for no specified reason, or outside of a ‘reasonable’ time period. It’s just as important that you know your rights as a retailer, and rest assured that you are not automatically liable to provide a return or refund to anyone that asks for it. It is important in these circumstances to have a clear returns policy that you can turn to when facing a difficult customer online.

Anthony Lieu is a strategist and lawyer at LegalVision with a strong background in understanding the myriad of legal issues surrounding online businesses.