Internet Shopping: What about Warranties? By Bernice Wilson, Extension Resource Management Specialist

Internet shopping has been growing by leaps and bounds in recent years. It is often referred to as electronic commerce or e-commerce, and it can be done 24 hours a day, seven days a week with the proper computer capabilities. But whether you are shopping online or in person, as a consumer you are protected by certain laws. These laws are referred to as the legal rights of consumers.

A right is having a benefit, a choice, or a claim to something with the expectancy of being treated in a certain way. Economist E. T. Garman (2006) wrote that the rights of consumers are important because they empower people to protect themselves in the economic marketplace. He stated that consumers have three types of legal rights: (1) implied warranties made in the sale of a product whether expressed in writing or orally, (2) express warranties that are contractual in that the product is assured and states under what condition a product is to be returned, replaced, or repaired, and (3) statutory rights provided in the details of written laws and regulations. Many consumer product warranties are governed under the federal Magnusson-Moss Warranty Act enacted in 1975.

In a past study on in-store shopping, researchers Lwin and Williams (2006) suggested that warranties are an excellent way to reduce a customer's perceived risk. Warranties can also make a positive difference for reputable online retailers in respect to a consumer's "perceived risk, perceived product quality, and purchase intentions." They believe it is necessary to understand how Internet businesses portray quality to Internet shoppers about their online products. Internet shoppers can then use this information to make wise shopping decisions since online shopping does not allow consumers to examine merchandise prior to purchase.

According to the Computerworld article E-commerce sales to boom for next 5 years by Linda Rosencrance (2008), online retail sales in the United States are expected to grow about $20-30 billion annually over the next five years, and reach $215 to $335 billion by 2012.

"When consumers make buying decisions, they adopt different risk reduction strategies, which impact their actual buying behavior. Thus, consumers are less likely to shop on the Internet if they are unable to adopt an effective means of reducing perceived risk," stated Lwin and Williams (2006). Risk relievers depend on the brand name, a retailer's reputation, and the website warranty information. However, online shoppers do not necessarily consider website warranties to be an important factor when purchasing brand name items.

While warranties are viewed as a risk reliever and one that public policy makers have embraced for non-Internet environments, additional legislation is needed to put consumers at ease as electronic commerce continues to grow (Lwin and Williams, 2006). Therefore, until such legislation has been put in place to provide further protection, consumers should exercise caution when shopping online. In the event a product does not perform satisfactory or meet their expectation, they may have to seek other remedies to obtain customer satisfaction.

Garman, E.T. (2006). Consumer rights, responsibilities and remedies. In: Consumer Economic Issues in America (9th ed.) (pp.42-43). Ohio: Thomson.

Lwin, M. O., & Williams, J. D. (2006, December 22). Promises, promises: How consumers respond to warranties in Internet retailing. The Journal of Consumer Affairs, 40(2), 236-260.

Rosencrance, L. (2008, February 5). E-commerce sales to boom for next 5 years. ComputerWorld. Retrieved October 5, 2009.

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