E-commerce delay in product delivery can be misleading

Zappaterra FusionThe Italian Competition Authority (AGCM) recently sanctioned three e-commerce operators for unfair commercial practices due to lack (or delay) in the delivery of products initially declared to be in stock and due to false information provided to consumers with regard to refunds.

The E-Commerce Dispute

Consumers claimed that, further to a purchase of the websites shoppingmgm.com, ilmercatodellaffare.com, and zionsmartshop.com of products displayed as in stock for delivery, those were then declared unavailable by the relevant company.

AGCM established that (particularly in one case) a so called “drop shipping technique” was implemented i.e. the e-commerce operator ordered the goods from its supplier only following an order from the relevant customer on their platform and the performance of the payment by the latter.

In all cases AGCM held that such commercial practice had to be considered misleading and unfair under the Italian Consumers’ Code and therefore unlawful as the relevant e-commerce operators were fully aware of the impossibility to deliver the products within the timeframe set out in the websites Ts&Cs. Accordingly the companies’ behavior did not meet the higher standard of professional diligence required by the Italian Consumers’ Code.

In addition to the above, consumers experiencing the considerable delay in the delivery of the products, were not always able to get in contact with the relevant companies, or when a communication was established, they were not able to exercise the statutory right of withdrawal prescribed by the EU Consumers Rights Directive and obtain the refund of the price paid for the products not delivered on time (or not delivered at all).

The Sanction

In light of the above, AGCM sanctioned MGM, one of the relevant e-commerce operators, with a fine amounting to € 50,000 for displaying the product as it was in stock while this was not the case, and with a fine amounting to € 75,000 for not complying with the refund policy.

In the other two cases, AGCM sanctioned Il Mercato dell’Affare and Zion Smart Shop by suspending any sale of non-available products on the website. The lack of compliance with said decision would result in a fine amounting to a minimum of € 10,000 up to a maximum of € 50,000.

For sure, the coming into force of the new rules on consumers rights implementing the Consumers’ Rights Directive (as discussed here) have strengthen consumers’ protection, particularly with regard to online purchases.  Accordingly, it comes as no surprise that AGCM is keeping a though approach against websites not providing consumers with the protection required by the applicable law.  And such issues cannot be ignored since AGCM can issue fines up to € 5 million and order the suspension of the business activity. Let us know if you want to discuss (Giulia.Zappaterra@dlapiper.com / @GiuZappaterra).