A couple of weeks back when uploading our data feed, a couple of products which were regularly $99.99 accidentally got uploaded as $0.99. It didn’t take long for a few folks to purchase these items. This unfortunately isn’t the first time this has happened and I’m sure we’re not the first ones to go through this.
Normally when an error like this happens, I’ll suck up the loss in the name of good customer service. On this one though, given the huge discrepancy, I canceled the orders, explained what happened and asked the customers to re-order and provided them a fairly considerable coupon. All of the customers were understanding and grateful for my candidness but one customer was very annoyed and pulled out words like ‘false advertising’, ‘sue’, etc. (eventually I reasoned with him and we came to some understanding).
Although I knew the threat of legal action was the idlest of threats, I’ve always wondered about the legality of situations like this. Some customers are quick to paint this as ‘false advertising’. I, possibly naively, suspect there must be some legal allowance for accidental errors like this which bare no malicious intent to deceive. I worry though that if a customer has paid for an item this instigates a contractual obligation (although I can imagine scenarios with far direr consequences than mine in which a car dealership accidentally lists a Ferrarri for $100 instead of $100,000!).
Most traditional advertisers include a note in their ads to the effect of “not liable for errors, omissions or inaccuracies” and online you can often find this in a terms of service. Of course few people read the fine print so it’s not always something they agree with but usually when there’s a clear error the sales come from it going viral on some forum and the hope that maybe their order will ship before anyone notices.
I’m not sure if the statement is actually necessary to reduce liability. The odds that someone is going to sue you for a $50 savings are small and if it’s one time (rather than something ongoing to trick people into visit which does happen) it seems hard to believe anyone would judge that as fraud. But it’s a good question.
I can’t speak about the laws of other countries (and am not a practising lawyer), but in the UK an internet sale is generally only agreed when the item is delivered - but it does depend on the terms set out on the various sites.
I don’t know how product feeds on third party sites would play into this, but as for mislabelling prices on sites by accident, the seller can normally just refuse sale.
False advertising, would indicate there was a deliberate attempt, vs an accidental so it wouldn’t apply. In most states, if a product is incorrectly marked, the merchant doesn’t have a legal obligation to sell it at that price as long as they catch it before the transaction is completed. In an online transaction, completed would indicate payment is made, the customer is given a receipt, and the merchandise is delivered. The only obligation would be to cancel the order and provide a full refund.
It’s unlikely that you would be liable to fulfill an order like this. It’s definitely not false advertising, just a genuine mistake. And most, if not all of these customers knew it was a mistake, but chanced their luck.
Most online vendors will make this clear in their ToS, but also in the initial email they send the customer after purchase. For example:
Please note that for items ordered from Amazon.co.uk this e-mail is only an acknowledgement of receipt of your order and your contract to purchase these items is not complete until we send you an e-mail notifying you that the items have been dispatched to you. For items purchased from third parties in Marketplace, your contract to purchase these items is not complete until you receive an e-mail notifying you that the item has been dispatched.
Here is an article from a U.S. law firm: http://www.wilmerhale.com/are_sellers_bound_by_mistakes_in_online_advertisements_06-30-2003/… The article is 9 years old but is a nice summary of the law.