December 13, 2010
By the ZippyCart Shopping Cart Reviews Content Team
Yesterday, U.S. Senator Charles E. Schumer reached out to the FTC to begin discussions about adding more stringent regulations to online retailers with regards to return fees. At brick and mortar retailers, when a customer comes in to return a previously purchased item, there is sometimes a restocking fee in the form of X% of the overall purchase price. Honestly, restocking a product takes very little time in most physical stores, unless the store sells electronics, in which case they require a technician to look over the product before putting it back on the shelves. And as an added plus, this small fee often keeps consumers from returning the product, thus reducing losses and keeping profits steady. Regardless of the reasons behind brick and mortar restocking fees, any physical store that has these fees is required by law to post a notice at their registers about these fees in many states. Other states require that these fees be noted on the purchase receipt.
This extra transparency takes hidden fees out of hiding for any consumer willing to look, but the same warning about fees is not currently required of online merchants. Of course, restocking for the online merchant can actually take a good deal of time and often includes the cost of shipping, so these fees often necessary. That said, with online holiday shopping already up 12% this year as compared to 2009 (reaching 22 billion over the past 40 days), many feel that it’s time for online merchants to disclose return fees to their customers and Schumer is leading the charge.
In a letter to the FTC, he calls for an agency to be created, which will determine how best to regulate online retailers. The opening of his letter states:
This busy holiday season has brought welcome reports of vibrant retail sales, with particular growth in the online market. While the revitalization of the American retail industry is exciting news, the increased growth in online sales requires heightened sensitivity to the new ways consumers may be put at risk.
And this holiday season is definitely busy, as a Compete survey suggests that there has already been more spending online than at retail stores offline, which is a first in the history of ecommerce.
It is still unclear if more government officials will get involved with Schumer’s fight for transparency, but likely that this won’t end with a simple letter. As online spending becomes the norm for consumers, online merchants should prepare for more government regulations that ensure consumer safety. In the end, this will likely be the best for all involved and will rule out Decor My Eyes type competition.