Not a drone deal: When a discount’s not a discount
Can an online retailer unilaterally cancel your purchase?
Carl Starke was annoyed when his purchase of a “discounted” R18,000 drone he had ordered from SA’s biggest online retailer, Takealot, was unilaterally cancelled two days later, due to a “stock shortage”.
He was even more annoyed to see the identical drone advertised at R25,800 soon afterwards. When he complained to Takealot, he was told a refund was his only recourse because “the product that is available now is being sold by a different seller for a different price”.
And then he was sent the retailer’s terms and conditions: “Should there be any errors, which are not due to our gross negligence, we shall not be liable for any loss, claim or expense relating to a transaction based on any error, save – in the case of any incorrect purchase price – to the extent of refunding you for any amount already paid …”
I have investigated many such cases with Consumer Protection Act experts in the past. Three years ago, SAA’s online site mistakenly discounted business class tickets from Jo’burg to Dubai to R858, when the normal price at the time was more than R30,000.
Many commentators fumed online, insisting the airline was legally obliged to honour that ridiculously low price, because, they argued, “the price you see is the price you pay!”
Actually, the Consumer Protection Act (CPA) says no such thing. What it does say is this: “If a price as displayed contains an inadvertent and obvious error, the supplier is not bound by it after correcting the error in the displayed price; and taking reasonable steps … to inform consumers to whom the erroneous price may have been displayed of the error and the correct price.”
Commenting on the SAA case at the time, CPA attorney Janusz Luterek said: “The purpose of the CPA is to protect consumers from exploitation, such as bait marketing, but an error of the magnitude described here cannot be seen as bait marketing; it’s clearly a glaring error. It is not the purpose of the CPA to allow consumers to exploit suppliers.”
In this Takealot case, I put it to the company that, regardless of their terms and conditions, the advertised price Starke paid for that drone – R18,000 – was not a glaring or obvious error and thus he could not be accused of intentionally exploiting a mistake.
Responding, Takealot said it had investigated the matter and decided to honour the original price quoted to Starke.
“There was human error involved in the matter,” the retailer said. “Before a product goes live on the platform, a listing is drafted. If a recommended selling price is not confirmed, a ‘holding price’ is entered for updating before the product goes live. The listing was unfortunately approved in error before the price was confirmed. In the case of this product, the supplier set a global price which Takealot was required to adhere to. When the error was picked up, the order was cancelled.”
And here’s the interesting part: Takealot said when an order is cancelled, operators have a number of standard “communications” they can choose from to update customers. Because there wasn’t one to cover the reason for Starke’s cancellation, he got that “inaccurate” response about stock shortage, followed by that “different retailer” one.
“The company is in the process of reviewing its systems to ensure a far greater level of explanation,” Takealot said.
So Starke got his drone at the initial price advertised, and other Takealot customers will be getting the benefit of more precise stock responses, should their orders be cancelled.
And while the term “obvious error” is a subjective one, I would suggest that online retailers give the benefit of the doubt to customers who place orders based on a price that could feasibly be a “special”, before whipping that wrong price off the site as quickly as possible.