ACM fines online stores for violation of rules on refunds

The Netherlands Authority for Consumers and Markets (ACM) has imposed a fine of EUR 500,000 on online-store owner T.O.M. bv and its two directors for violating the rules on refunds when cancelling orders. T.O.M. bv sells bikes, athletic wear and athletic accessories, among other products, to consumers through its online stores such as Internetbikes, Internet-toys, Internet-sportclubs and Internet-sportcasuals. ACM had received serious indications through its consumer information portal ConsuWijzer and a study conducted by the Dutch Consumers’ Association (Consumentenbond). Consumers that had cancelled their orders were not automatically given their refunds unless they specifically insisted on getting them. With these practices, the online stores violated various rules that protect consumers when making online purchases. Henk Don, Member of the Board of ACM, explains: “It is important that consumers are able to make online purchases with confidence, that they are able to cancel their orders without any problems, and that they know they will get their money back. ACM takes action against online stores that do not stick to these rules, as they hurt consumer confidence.”

Rules on online purchases

To give consumers that make online purchases the opportunity to look around, they are given the right of cancellation: consumers are allowed to cancel within 14 days after the day of receiving their purchase, without any reason. The online store must refund to consumers, within 14 days, the full amount of the order plus any shipping costs. The online store must pay back the refund by the same method as the original payment. Giving a voucher as a refund is therefore only allowed if the consumer had paid for the original purchase with a voucher.

T.O.M. bv, the owner of the aforementioned online stores, knowingly violated these rules. The standard practice that the company used for its online stores was that refunds were not automatically given if consumers had lawfully cancelled its purchases. It argued that consumers failed to enter their bank account details (IBAN) on the return form. If consumers did notify T.O.M. bv of their situation, they were given their refunds in vouchers. Only those consumers who did not agree with that solution were eventually refunded in cash. But that often did not happen within the statutory time limit. In addition, shipping costs were often not refunded either. The company put consumers on the wrong track by giving incorrect and misleading information about their right to refunds in case of cancellations. For example, consumers were told that they had not correctly followed the procedure for offering return shipments, or that their return shipments could not be processed because consumers had failed to enter their bank account details on the form.

Attention for refunds in case of returns

ACM had previously announced it would take action against online stores that do not give consumers their refunds in a timely manner or fail to do so at all. In that context, more online stores are on ACM’s radar. This is the first case in which ACM has imposed a fine. ACM has imposed fines totaling EUR 500,000 on T.O.M. bv. The two executives are jointly and severally liable for part of that amount, which is EUR 125,000 per individual.