The Ecommerce Forum South Africa (EFSA) is planning to develop an online dispute resolution platform, as the rapid increase in consumer complaints sees the e-commerce sector become the most complained about industry in SA.
According to the e-commerce body, the platform will aim to fast-track trust between consumers and e-shops by “ring-fencing” fraudsters, while promoting good governance of online businesses.
This, as the Consumer Goods and Services Ombud (CGSO) has been inundated with consumer complaints against online retailers and e-commerce fraudsters.
The consumer watchdog says e-commerce complaints have escalated to surpass those laid against telecoms operators – which previously had more complaints than any other sector.
Furthermore, SA has seen an increase in fraudulent online shopping sites, as e-commerce sales reached a tipping point over the last three years, creating a lucrative opportunity for criminals.
In an interview, Alastair Tempest, EFSA CEO, told ITWeb the new platform does not intend to replace the work of the CGSO in handling complaints. Rather, the system will help e-tailers provide an effective customer relations service by providing a complaints system to receive complaints and feedback from customers, he explained.
“Everyone appreciates that the COVID pandemic drove the growth of e-commerce in South Africa. E-commerce as a percent of retail turnover grew from about 2% in 2019, to nearly 5% in 2022.
“However, the downside has been a rapid increase in complaints received by the CGSO. This is really worrying. A lot of complaints are due to easily corrected errors, but the ombud notes a sharp increase in deliberate fraud.”
The initiative will be established in partnership with the CGSA and SA Fraud Prevention, among other partners, he added.
According to Tempest, criminals are increasingly creating counterfeit e-shops, masquerading as legitimate online retailers, specifically to cheat consumers, or divert payments.
“Some of these frauds are very sophisticated and cause serious issues of consumer trust. They must be ring-fenced.”
ITWeb recently reported on Froggie Shoes customers being duped by a fake online sale. Dozens of South Africans were swindled out of thousands of rands, after scammers cloned the website and Facebook pages of the local shoe retailer.
Explaining the “ring-fencing” element, Tempest pointed out that as part of the first level, a blockchain-based certification or verification system will be created to provide a “trustmark” to e-shops meeting the criteria of a credible service provider. Companies would also have to agree to the EFSA’s code of conduct, which is a synthesis of the different laws.
“The second level will be to create an online alternative dispute resolution (ADR) system, so that a consumer can lodge a complaint by clicking through the trustmark seal. We plan to launch a pilot with the first level trustmark as soon as we can find the resources.”
The e-commerce body estimates the entire project may be a three-year process to get the trustmark and its ADR up and running.
“The ADR service may reduce the number of easy-to-solve complaints which are referred to the CGSO. We plan to add other aspects, including training, in the future, as added value to the trustmark.”
Meanwhile, the CGSO tells ITWeb its latest stats show the e-commerce sector has overtaken the telecoms industry by 11%, in terms of consumer complaints received.
“We continue to monitor online complaints and where we notice a trend regarding a specific fraudulent supplier/website, we issue warnings to the public,” says Phillip Ramalobela, senior adjudicator at CGSO.
He points out it is important to note there is an increase in consumer complaints received regarding reputable online stores, as well as fraudulent sites.
According to Ramalobela, the top two types of complaints received from the sector are focused on goods not delivered on time and goods not as per order or requirement.
“Upon receiving complaints, we attempt to facilitate the resolution of complaints in terms of our complaints processes, but we do not have enforcement powers and therefore, if parties do not wish to co-operate with our offices, we cannot force them to do so.”
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