OFT study internet shopping

07 September 2006

Alice Sculthorpe

A fact-finding study into online shopping was launched by the Office of Fair Trading (OFT) in April to determine whether consumers have confidence in e-commerce and whether they received a fair deal in key areas such as electrical goods, music downloads, airline tickets and online auctions.

Around 130,000 UK businesses now sell online, in a market representing about 2.5 per cent of all household spending (over £18 billion a year in total), according to government figures. In the last five years, internet retail sales in the UK rose by over 350 per cent, compared with growth of only 20 per cent for all retail sales. Other research has, however, also identified consumer concerns about security of payment, or potential problems with delivery when shopping online.

The OFT has taken some action to protect consumers on the internet in the past. In March this year it acted to ensure that the major supermarket chains provide clearer information about online pricing of products. In July, Dell Corporation Ltd agreed to change its terms and conditions to make them fairer to consumers, in response to concerns raised by the OFT that a number of terms were inconsistent with the Consumer Protection (Distance Selling) Regulations 2000 and the Unfair Terms in Consumer Contracts Regulations 1999.

Specifically, the new study will examine:

  • consumers’ confidence when shopping on the internet;

  • levels of regulatory protection for online shoppers;

  • consumers’ awareness of their rights when shopping online; and

  • business’ understanding of, and compliance with, the relevant legislation.

Four sectors are being targeted by the study: domestic electrical goods, music sales (including downloads), airline ticket sales (including accommodation bought at the same time), and online auctions. The OFT’s press release states that these sectors have been chosen because they represent at least a third of all online spending and are good examples of the internet as a growing and developing marketplace.

The OFT will make contact with business and trade bodies, to hear their views, but the purpose of the study is to conduct exploratory research, not to investigate particular companies. Online businesses should use this as an opportunity to influence any possible changes to legislation in the future.

The OFT expects to publish its finding in spring 2007.

See: OFT data on internet shopping