Online marketplaces are changing how we shop

The online revolution has had a real impact on the way we shop as we turn our backs on the high street and embrace the convenience and choice online retail has to offer.  Online marketplaces such as eBay and Gumtree, which act as intermediaries, allowing individuals and businesses to trade with each other, are a big part of this picture – eBay alone had a digital audience of 27.3 million in March 2014, making it the UK’s leading retail website. But are the consumer protections drawn up in the analogue age up to the job of protecting consumers in the brave new world of peer to peer trading?

Our new report, Peer Problems, presents the first assessment of consumer protection in online marketplaces, based on the results of independent polling carried out online by YouGov and new analysis of data from our own Consumer Helpline.

The picture we find is one of markets that are meeting the needs of modern online consumers but when things go wrong people can’t always get the help

they need and can end up frustrated, confused and out of pocket. The report also sets out some clear challenges to markets and law makers to address the changing needs of consumers.

We found:

  • Online marketplaces are now a mainstream way to shop:  30 million people in England and Wales, 83 per cent of people with access to the internet, bought at least one item from an online marketplace in the past 12 months.
  • But problems are more widespread than we would like to see: 10.7 million people, 37 per cent of recent online marketplace users, have encountered a problem when buying goods through an online marketplace in the past 12 months.
  • And too many problems are not resolved: 14 per cent, an estimated 1.5 million people across England and Wales, were unable to resolve their most recent problem, leaving them out of pocket.

In our own data we see the sharp-end of scams and fraud, but our polling also reveals more widespread failures of basic consumer protection, such as faulty and misdescribed goods.

A lot of the problems we see are the same we see in other markets. As intermediaries between the buyers and sellers who use their site, online marketplaces have a real opportunity to tackle some of the problems that we have found.  They also have a clear business case for doing so. Most people who wouldn’t use an online marketplace told us this was due to concerns about redress, security and the standard of goods, not the types of products which are on offer.

As the consumer champion Citizens Advice is uniquely placed to speak on behalf of consumers. Our report sets out a number of key areas for action which we believe could make a difference to consumers. Part of the problem comes from consumers not knowing if they are dealing with a business or an individual or understanding that they enjoy different legal rights and protections depending who they are dealing with. Clearer information on consumer rights could be part of the answer to this.

Currently, many sites concentrate on their own resolution services. In many cases this is enough for most people to resolve any problems that they have but here is also a need for more comprehensive dispute resolution services that go beyond what the sites offer. The potential of alternative dispute resolution services will be one or the options that we will be exploring further with online markets.

Finally, we already know how important feedback is to consumers in helping to make purchasing decisions. We think that this could go further. In particular, there is a need for extended feedback windows that cover not just the transaction period, but allow buyers to feedback on products if they break down more than a month later. We will be working with online marketplaces to see how they can do this, taking practical measures to reduce the risks buyers face while retaining convenience and ease of use.