Unfair e-commerce: the Italian Antitrust Authority punishes Italian online trader Techmania

The Italian Antitrust Authority (AGCM) punished Techmania S.r.l., a tech e-commerce company – already penalised by the Authority in the past – having found it in breach of Articles 20, 24, 25(d) and 61 of the Italian Consumer Code, which deal with the prohibition of unfair and aggressive commercial practices against consumers (including the imposition of barriers by the trader to the exercise of consumers’ contractual rights) and grant consumers the right to terminate the contract and receive reimbursement if goods that they purchase via distance selling are not delivered within 30 days.

The proceeding started pursuant to dozens of customer complaints received by the Authority between June and September 2015, reporting the Company’s failure to meet reimbursement requests following the failed delivery of products that had been purchased online and paid for upfront.

Techmania defended itself by arguing that the number of complaints showed a decrease over time, that most of such complaints had been solved in the meantime and, in any event, that they only represented a marginal share of the company’s global business volume. It also said that it had set up an expensive customer care service which, while it was able to promptly notify customers in case of delays in deliveries, could not directly process any reimbursements, should they be required.

The Authority found these defences irrelevant and noted the unfairness of the company’s commercial practices. It pointed out that the company regularly engaged in selling goods that were neither in stock at the time of sale, nor ordered and shipped to consumers in a reasonable timeframe, finding that the number of occurrences showed this to be the consequence of “a huge organisational and managerial deficit“, and not just a temporary supply difficulty.

With regard to the failed reimbursements, the Authority observed that there were “countless proofs of delays, of delaying tactics, of standardised, evasive and elusive replies, given by the trader to consumers“, having in the Authority’s opinion the sole purpose of hindering consumers in recovering the amounts unlawfully withheld by the former, when, instead, the reimbursements due upon the reasonable cancellation of an order should have been immediate and automatic.

This revealed in the Authority’s view “a clear professional strategy, aimed at attracting consumers with offers of products sold at extremely affordable prices, causing them to purchase and pay up front without then proceeding to delivery (…) artificially withholding or delaying the return of amounts paid“. This was further demonstrated, according to the Authority, by the fact that the only customers reimbursed were those with the most vehement reactions.

In addition, the Authority found these practices to have “a high degree of offensiveness, since the website www.techmania.it is still active and as such capable (…) taking into account the exponential growth of online sales and the characteristics of the offers advertised by the professional – i.e. technology products with attractive prices – of reaching a high number of consumers“, who are thus induced “to take a commercial decision that they otherwise would not take“.

Based on all the above, the Authority ordered the immediate suspension of the online sale of unavailable products as well upfront payment for products not in stock and issued an administrative penalty (from € 10,000 up to € 5,000,000) in case of failure to comply.

It should be noted that, a few days after the publication of this decision, a notice of seizure by the Guardia di Finanza (Italian Tax and Custom Police), acting under the direction of the Public Prosecutor of Salerno, appeared on the homepage of the company’s website. According to the press, this far more punitive measure arose from a criminal investigation for fraud. The author however has no direct knowledge of the criminal case and is thus unable to confirm the accuracy of this news.