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Refunds and complaints: What to know when direct-to-customer merchants don't deliver

More businesses are selling their wares directly from their websites, cutting out retailers and online marketplaces. But not all of them are getting it right.

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When a furniture shipment was canceled, the author thought she might never meet the loveseat of her dreams. Here's what to know if you're in a similar situation.

Photo illustration by Sara Tew

It was loveseat at first sight. My Google search for furniture returned an ad for a sweet little gray two-seater with wicker accents. But it was sold by an online retailer I'd never heard of before, Hulala Home.

I had doubts. The website only said that Hulala Home was a furniture supplier that recently started selling its wares directly to customers, and not much else. But I took the plunge because I wanted that loveseat.

The day after my item shipped, I tracked my package with FedEx only to see the seller had canceled the shipment with no explanation. I shot an email to Hulala Home and felt growing dread when I found reviews on the company's Facebook page. Two other customers said they'd been strung along on when their items would arrive, one for weeks. Another said they received furniture with missing parts. Had I been catfished by a chair?

Not quite. Hulala Home first explained the item would take longer than expected to ship, and then granted my refund when I decided not to wait. A Hulala Home customer service representative apologized and offered me two free throw pillows (I declined). A company spokesperson said that logistics companies are struggling to keep up with increased demand for online shopping during the pandemic. Still, he said he understood that experiences like mine could worry shoppers. 

"When you see a canceled order, you worry if it's a scammer and if you'll get your money back," said the spokesperson, who gave only his first name, Leon. "When you shop at Home Depot you don't have this worry, which is of course understandable."

Shoppers are likely to find more stores like Hulala Home online. Pushed by a desire to reach customers without paying a middleman, manufacturers are increasingly cutting out big box retailers and selling directly online. In turning to "direct to customer" sales, the industry term for selling from a company's website, previously unknown suppliers and major brands alike are joining a group of companies called digital natives. These are your Casper mattresses, your Thinx underpants, or your Primary children's clothing, all of which have always sold directly online.

The pandemic has presented new hurdles to online success for all these kinds of merchants, confirmed Dan Brewster, vice president of marketing at Scalefast, a retail logistics company. Overseas factories had fewer workers to build products, international shipping slowed down and massive delays hit domestic delivery services, including the US Postal Service and UPS. Those challenges made it especially difficult for smaller companies with online-only presences to deliver their goods.

Plenty of other online shoppers have had it worse than I did, receiving only promises of shipments until after the 60-day deadline for contesting the charges (this rule might not apply, so keep reading). Or they receive something that looks nothing like what they ordered, and the return process is too onerous.

Of course, these problems can also happen when you buy from third-party sellers on marketplaces hosted by Amazon, Target or Walmart. But the host companies facilitate refund requests on their customers' behalf, giving shoppers an obvious avenue for dealing with disappointment. When you order directly from a manufacturer's website, it's just you and their customer service. Here's more information about buying directly from company websites, and what to do if it doesn't go as you hoped.

If I don't get my order, is the business a scam?

Not necessarily. Legitimate businesses might satisfy some customers and disappoint others from time to time. That includes digital natives and brand names alike.

In addition to overcoming the logistics challenges presented by the pandemic, even Fortune 1000 brands have a lot of work to do to get online sales working smoothly, said Tom Lukareski, managing director of e-commerce consulting firm Devbridge. Previously, their retail partners took care of consumers while the manufacturer kept track of the business on a handful of spreadsheets.

Now brands must keep closer track of their inventory, making it searchable and relevant for shoppers. They also have to figure out the logistics of keeping stock, shipping and returns, so there are bound to be mishaps and disappointed customers during the transition. 

There's some indication this has led consumers to mistrust direct-to-customer companies. According to survey results released by Scalefast on Tuesday, 15% of Americans group brand manufacturers (like Nike and Adidas) with the most reliable sellers. Only 6% said they count direct-to-customer suppliers among the most reliable places to shop. Marketplaces run by Amazon and Walmart were perceived as the most reliable by 57% of respondents, and 41% said traditional retailers were among the most reliable (respondents were allowed to select multiple options as "most reliable.")

Those feelings don't necessarily reflect reality. For example, there's no indication that third-party sellers on Amazon or Marketplace are more reliable than stores selling directly from their websites, said Susan Grant, director of consumer protection and privacy at the Consumer Federation of America. 

Can I get my money back?

Things do sometimes go wrong. If you never receive your item, or it's substantially different from what you ordered but would cost too much to return, there are steps you can take. One thing is clear when you don't get what you paid for. You're entitled to a refund. 

"There is no gray area -- if you can't deliver on a contract, you owe the consumer back the money," Grant said.

Federal law requires companies to deliver online orders by the promised date or within 30 days, whichever is longer. At that point, the company must offer you a choice between waiting longer or a refund. Also, many credit card companies don't allow merchants to charge you until your purchase is shipped.

If a company says it's going to ship your item, that promise is binding, Grant said. Even if you wait so long you pass the 60-day deadline for complaining to your bank or credit card company, you can still contest the charges. You'll need any emails or correspondence from the company promising to ship the item. 

You should also be able to contest the charges if the item you receive is substantially different from what you ordered, but that can be a bit trickier to wrangle. The seller might insist they sent the right product, and your bank or credit card company likely won't want to decide the dispute. In that case, you can complain to the consumer protection agency for your state or region, Grant said.

Should I avoid buying directly from companies?

You don't have to do that. In my case, I turned to a big box retailer and got the exact same chair, made by Hulala Home. It looks great with my light wood bookshelf. But even though I almost got burned, I'm still open to love… seat. 

Selling directly to customers is becoming a very common way to do business, so you might miss out if you write the option off. Leon, the Hulala Home spokesperson, said he thinks things will get better across the industry. 

For now, "most of the websites that [offer] direct-to-customer will have this problem," he said.

You can get smart in the meantime. Websites like Trustpilot and Better Business Bureau aggregate customer reviews for brands that sell directly. There you can see if the company isn't delivering orders, is sending shoddy approximations of the products pictured online, or even if it's just wildly inconsistent.