The former operator of an online toy business has been fined $4,000 after a Queensland court ruled he failed to supply goods after accepting payment.
Christopher Miles, the operator of online retailer Toy Palace, pleaded guilty to seven counts of accepting payment and failing to supply goods in the Brisbane Magistrates Court last Friday, following action by the Queensland Office of Fair Trading.
Toy Palace was issued with a court injunction in Victoria in February last year after more than 140 shoppers complained their orders were not fulfilled. This injunction prevented Miles from taking customer’s money upfront until 2020, permitting only “cash on delivery” transactions.
The court action in the Brisbane Magistrate’s Court on Friday related to seven purchases made in 2015, for which customers had still not received refunds, according to the Office of Fair Trading.
Five of the customers had sought refunds from their credit card companies, and one received a refund from Miles prior to his court appearance. Miles has promised to pay back the remaining customer.
Executive director of Fair Trading Queensland Brian Bauer condemned Miles’ actions, saying this kind of conduct can “undermine consumer confidence in online businesses”.
“Just because a business operates online, and not as a bricks-and-mortar store, does not mean that their obligations under the ACL [Australian Consumer Law] are any less stringent,” Bauer said in a statement.
Toy Palace’s website has been shut down since the business first came under fire from Consumer Affairs Victoria in July 2015. At the time, Consumer Affairs had received around 100 complaints from consumers and made efforts to shut down the website.
No traces of the retailer are left online, aside from reviews on product business review website Product Review.
“I ordered a star wars lego set for my son’s birthday a month in advance but never showed up. I tried chasing it up but every reply I get brings frustration and stress,” wrote one South Australian customer.
“Really gutted that someone like your company makes money ripping off parents working hard to buy their kids gifts for their special day.”
Andrew Parlour, a commercial lawyer at Russell Kennedy Lawyers, told SmartCompany online retailers have an obligation to supply goods to customers within a reasonable timeframe, even if the lack of stock was unintended.
“Consumer guarantees dictate that a supply of services or goods is dealt with in a reasonable period of time, which this retailer clearly didn’t,” Parlour says.
“If he had indicated delivery of the goods were not guaranteed until after a certain date, he may have been protected.”
Parlour says these issues can affect retailers that have more successful marketing campaigns than expected and find themselves out of stock sooner than expected. He advises online businesses to put in measures to prevent this from happening.
“You don’t really see this happen with bricks-and-mortar stores. You know what stock’s there, and you know when you run out,” he says.
“Online systems can often take orders that don’t match stock, so systems need to be implemented that only accepts orders that match current stock.”
As for retailers that find themselves unable to provide customers with their goods, Parlour recommends taking quick action.
“Retailers should take the appropriate course of action: notify customers you are unable to supply and offer a full refund or the option to wait until the goods are available,” he says.
“Give them an option one way or other.”
SmartCompany was unable to contact Toy Palace or Miles prior to publication.