Is it unethical for online stores to take advance payment for orders with no long term availability?

Richdog

Richdog

Richdog

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I was discussing this with a friend today and we were of the opinion that it is unethical for so many online retailers to be taking payment in advance, at the moment of ordering, for products like new GPU's that have no preliminary delivery date and which could literally take many months to arrive. Retailers KNOW it could take months, they often have no idea when stock will arrive and yet they still take that money immediately.

There are some major online stores that shall of course remain nameless that do only take payment upon availability of said products, but overall not many.

It looks even worse when you realise that many online stored have sold way too many backorders despite knowing that are choosing not to cancel orders and are still holding the money of people who may actually not even receive a card at all.

So my question is... how can online stores justify taking money for products that have little hope of being fulfilled any time soon and often with even no estimated delivery dates? If demand is so much higher than supply and sales are guaranteed then why would a store not just take payment upon shipping, when they know they have the item in stock? :confused:
 
If they didn't take money upfront, people would place 10 different pre-orders with 10 different companies, take whatever comes first and then cancel all their other orders.

Then the companies would have loads of stock they've had to pay for, that they potentially can't sell.
 
VincentHanna said:
If they didn't take money upfront, people would place 10 different pre-orders with 10 different companies, take whatever comes first and then cancel all their other orders.

Then the companies would have loads of stock they've had to pay for, that they potentially can't sell.
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Vincent, think a little. GPU demand is crazily higher than supply, of course they would sell any stock of cancelled orders immediately.
 
I seem to recall there being a law that was along the lines of you can't take payment for goods that can't be sourced within 30 days. But even if that is correct there's probably loopholes.

Early pre orders are fine imo. We've seen how those happy to pay early got what they wanted, consoles/GPUs. If paying on CC you're pretty well protected. Also in our current situation if you could pre order without payment the bots could be even worse.
 
I think you're right about this. I wonder isn't there any laws that could say what is a reasonable time to take?

I would think it is false advertising for a site to act like a product is in stock when it's not. They should at least list it as out of stock and make it known that it will go on as a back order.

In my view money should only be taken at the point of shipment. Anything other than that is taking money for a product the store doesnt have. So unless the store is willing to refund the order if the customer changes their mind then it seems like its on dodgy ground. I suspect this issue hasn't been tested in a court of law yet.

As I mentioned in a post on the PS5 thread, the product makers need to start enforcing minimum standards on retailers to have some control against scalpers, even if it means just having an account of X amount of days old.
 
I don't think a shop could counter the unethical argument.

Perhaps a message upon ordering to state that money would be taken at point of purchase, but delivery time could be a way off. It's upto the customer then whether to continue with the purchase or not.

Frankly with the demand of cards, it's largely irrelevant as I'm sure most people will just say take my money rather than risk being back of the queue.
 
As long as it sits on the balance sheet as a liability then all good. Not like they can profiteer from it, it is simply to secure legit pre-orders and bolster cash flow.
 
montymint said:
If the store offers the option of cancelling for a full refund at any point up to shipping , there is no issue.
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I would disagree that there is no problem... there is still the ethics of taking money for those orders knowing that there is no idea when you can fulfil them.

Semple said:
Frankly with the demand of cards, it's largely irrelevant as I'm sure most people will just say take my money rather than risk being back of the queue.
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I'm not sure I get this logic... ordering without paying immediately would still keep you in a queue.

dLockers said:
As long as it sits on the balance sheet as a liability then all good. Not like they can profiteer from it, it is simply to secure legit pre-orders and bolster cash flow.
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Yes this reflects my view... it seems it is for their own benefit and similar to an interest-free loan that they can then use to order a lot of other things. All they need to do is make sure that they can refund the money if requested.
 
As long as the company is up front and honest about there being no confirmed and guaranteed delivery date and they allow the order to be cancelled before they receive the stock for a full refund, then I think individuals should be allowed to do what they want with their money. As long as there isn't any form of the company misleading individuals then I don't see the issue, they customer knows exactly what their spending the money on and when it might arrive.

As @VincentHanna says, why should a company take the risk of holding too much stock and ruining their cashflow just because someone said they were interested in buying something. It's not just "being able to sell it at some point," with such high value items getting too many in could be really damaging to cashflow which is one of the most important (and tricky) parts to get right when running a business.
 
is it unethical - of course it is. will it ever change - no, because people will just keep putting up with it.

VincentHanna said:
If they didn't take money upfront, people would place 10 different pre-orders with 10 different companies, take whatever comes first and then cancel all their other orders.

Then the companies would have loads of stock they've had to pay for, that they potentially can't sell.
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don't take pre-orders on something they have no clue on when they are getting and in what volumes.

ultimaltey how a business manages its stock shouldn't be a customers concern and it certainly shouldn't be managed by using the customers money.

montymint said:
If the store offers the option of cancelling for a full refund at any point up to shipping , there is no issue.
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yes there is, for one, money is taken immeditately at point of order but refunds can take 3-5 business days to process. if a prospective buyer only has 'x' set aside for a new gpu (for example) and they tie that up in a pre-order that turns out to be non-existent they could well miss out on stock elsewhere while waiting for their money back.

i personally would never pre-order anything and to my mind should be legislated against, however that may be.
 
I'm with you its a complete rip off.
But....
People seem more than happy to give away their money for 6 months+ and let the retailer make a fortune by investing it away.
And...
If people are happy to do this with no subterfuge from the retailer then..... What can you do?
 
Thekwango said:
yes there is, for one, money is taken immeditately at point of order but refunds can take 3-5 business days to process. if a prospective buyer only has 'x' set aside for a new gpu (for example) and they tie that up in a pre-order that turns out to be non-existent they could well miss out on stock elsewhere while waiting for their money back.

i personally would never pre-order anything and to my mind should be legislated against, however that may be.
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Honesty how it gives gives the customers the most choice and that is fair to retailers in this crazy market. There will come a time where demand will drop off completely and no one wants to be sat holding the bag of expensive GPUs that won't sell for the currently increased purchase price. Customers were given a choice (it's off the table now as far as I;m aware) of paying up and waiting or holding cash and fighting the bots for scraps or paying scalpers.

Taking option one away leaves the latter two, which only encourages scalpers more.
 
Thekwango said:
is it unethical - of course it is. will it ever change - no, because people will just keep putting up with it.


don't take pre-orders on something they have no clue on when they are getting and in what volumes.

ultimaltey how a business manages its stock shouldn't be a customers concern and it certainly shouldn't be managed by using the customers money.


yes there is, for one, money is taken immeditately at point of order but refunds can take 3-5 business days to process. if a prospective buyer only has 'x' set aside for a new gpu (for example) and they tie that up in a pre-order that turns out to be non-existent they could well miss out on stock elsewhere while waiting for their money back.

i personally would never pre-order anything and to my mind should be legislated against, however that may be.
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Well the opposite is also true for folk that didn't pre order PlayStation and ended up paying £800-£1200 come launch day. They should have ponied up when ore orders were launched like the smart people did.

I will continue to pre order PlayStation's in the future too for launches it will always sell out.

Pre ordering is arguably the smartest way to buy something that's high in demand and guaranteed to sell out.
 
For me it comes down to personal responsibility which most people today seem to be adverse to, if you don't want your money being tied up in a pre-order then don't order it.
 
Looking at Gibbo's recent update it looks like a lot of people who pre-ordered GPU's will getting a refund regardless once those SKU's go EOL latter this year.

People would be better off cancelling and investing that cash but so many people are in denial at the moment and just won't want to accept the reality (or hoping a mining crash will somehow fix things).
 
The whole GPU situation was weird.

Clearly way more orders were taken than cards were available or ever likely to be available however it's not like the ordering window was open indefinitely either - you were doing well to just get an order in at all before you even get to considering whether it was ever likely to be fulfilled.

Something is seriously broken in the process where you have such a limited sale duration but also end up massively overselling your (non-existent) stock.
 
I think some people are very bitter about the GPU market, hence this thread. But labelling the purchase process as unethical is far fetched.
They are not taking your money, you are giving it them. With a full refund option, and protection from various payment methods.

If anything, pre-order and full payment means you aren't subject to the massive price scalping that's gone on, and it's been a benefit for you. I wonder how many people would love to have a paid up pre-order for £700?
Gibbo has already touched on how much it will cost to honour the paid up pre-orders.

Just my opinion.
 
montymint said:
Honesty how it gives gives the customers the most choice and that is fair to retailers in this crazy market. There will come a time where demand will drop off completely and no one wants to be sat holding the bag of expensive GPUs that won't sell for the currently increased purchase price. Customers were given a choice (it's off the table now as far as I;m aware) of paying up and waiting or holding cash and fighting the bots for scraps or paying scalpers.

Taking option one away leaves the latter two, which only encourages scalpers more.
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not sure how it gives customers most choice. this isn't limited to the gpu market but we'll roll with that as it's quite an extreme example currently........you pre-order......but then after pre ordering you discover that you won't get the gpu until some unknown time in the distant future. you debate, ponder and wonder what to do. meanwhile another model comes up and in stock or the item you want becomes available elsewhere but your cash is tied up with a pre-order. where's the customers choice there? scalping etc is always going to happen for high interest items but putting them on a pre-order isn't the way, imo, to deal with that.

sure pre-orders are fine when you know you are getting your item on 'x' date and possibly with a cost saving incentive but pre-order for the sake of pre-order, especially when the retailer won't be able to deliver on the promise made at the time of pre-order. nah, that scummy at best and should be made illegal.

and for clarity before all the brown nosers jump in, i never was waiting for a new gpu so i'm neither salty nor bitter about the gpu situation i just generally despise the pre-order game retailers like to make their customers play. i'm quite happy with my custom cooled vega64 and will only upgrade when there is stock and at a sensible price.
 
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