Automated Credit Card Charging then 'Nil Stock'

  phoenix198 07:53 06 Oct 2007
Locked

I have had a couple of instances lately where I have made an online order based on a retailer's website showing the item as being 'in stock' and received automated e-mails (some of which were sent within business hours) confirming both the order and that my credit card had been charged.

A couple of days later I was then advised that the item was out of stock which implies that retailer had in fact either not had the item in stock in the first place, or had had insufficient stock to meet orders taken on their website. I'll make it clear here that on both occasions the retailer concerned refunded my credit card without hesitation once I had confirmed that I didn't want an alternative item or to wait an indeterminate length of time for fresh stock to arrive, although note the requirement on me to request a refund.

My questions is these:

- Is this just an example of poor retailer practice in not having a real-time automatic stock update system tied to the order placement system, or could it be considered as being 'sharp' practice - the retailer 'knows' he cannot meet the buyer's expectations in terms of meeting an early delivery date yet still accepts the money? Ammazon (for example) do not charge my credit card until the item is dispatched.

- What are the legal requirements on a retailer charging for goods (and delivery on a given date) at the point of order? i.e. Is not accepting payment for something you know in advance that you cannot deliver a case of entering into a contract in bad faith?

  Simsy 08:17 06 Oct 2007

a retailer doesn't have the item in stock, and even if the retailer KNOWS they don't have the item in stock, it doesn't follow that they KNOW they wont be able to deliver.

If I'm a retailer selling something and I am expecting a delivery of the item to my warehouse tomorrow I don't see it as unreasonable to take an order from a customer for the item.

Providing I have the wherewithal to make a rapid refund, in the event that I don't get the goods in stock as I expect, I don't see a problem with taking payment either. The important thing is that there should be no deception.

And I say that as a customer, not a retailer.


Having said that, I don't know the legal requirements.

Regards,

Simsy

  phoenix198 11:06 06 Oct 2007

about the necessity that there should be no deception, and legally that would probably the heart of the matter - whether or not there was an intent to deceive i.e secure payment against a KNOWN inability to deliver.

I completely understand that in order to be competitive (and deliver the low prices we customers demand) retailers cannot afford to tie up large amounts of capital in high volumes of stock and that they therefore rely on relatively small buffer stocks backed up by pseudo 'just in time' supply chains.

What I find annoying is an automated customer-facing ordering (and charging) system that does not integrate properly with the stock-control and supply-line ordering system, and so by automatically defer charging customers unless the supply line is assured.

I believe that unless a retailer has such a system in place they should defer charging the customer until the goods are dispatched. To not do so is effectively (if unintentionally) deceiving the customer who expects to receive what he/she ordered (and has paid for) to be delivered to them on the date he/she requested, and by inferral, agreed.

  jack 15:16 06 Oct 2007

As you said rea time updating may the the clue
As orders flow in and are accpted against 'known' stock- thr eal stock position is probably not known until the system -updates which may be end of shift or trading day.

  ajm 15:32 06 Oct 2007

There are major online retailers who may not have the stock physically, but available through the distribution or other chanels. In most cases the item may be showing stock, and once order is placed, the retailer places an order through the supplier/distribution who then ships the goods to you.

  bjblackmore 11:15 29 Oct 2007

I would check the legality of this.
I used to work in the IT department of a major clothing manufacture, and we were told by both the bank, and our online payment company (protx), that legally, you're not allowed to charge a credit/debit card, until you have stock to cover that order. It's something to do with the trade description act or something, its basically selling goods you don't own.
We got around this sometimes because even if we didn't have the stock in our UK warehouses, it was available, or being manufactured for us by a sister company in another country.

  spuds 12:48 30 Oct 2007

I think you you will find that it is good business practise not to charge for goods until they are dispatched, there is no legal requirement that a producer of goods or services cannot deduct funds at point of possible purchase. Another point is that 'legally' and within consumer law, the return of funds as a time span of 30 days, the funds do not have to be returned immediately.

At the time of placing orders can all result on up to date stock and supply levels, and automatic updates are not always possible with some systems. Take for example Ebuyer who over a weekend, may not put your order into the actual system till Monday. That method can result that certain products are delivered direct from Ebuyer or an alternative supplier and supply points, all taking perhaps different transport arrangements.Delays may or will occur.

Its extremely annoying to see funds removed from any of your financial arrangement accounts on the day of ordering, its even more annoying when one week or more down the line you are having to chase up why you haven't received the goods and the reasons why. Even more so, if the company as appointed administrators at the time of placing the order. Best to pay by credit card than debit card for possible extra safeguards. At least with a credit card, the retailer is borrowing money the same way the customer is!.

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