How should you respond to a false address or name or a fraudulent order in an online store?

If you ship the merchandise knowing that the order is a fraudulent order, there is a high possibility that the merchandise will be returned to the shopper, which will result in unnecessary costs. However, there are legal considerations to keep in mind when not shipping goods or canceling an order after it has been placed.

In the purchase of a product from an online store, the customer’s order is regarded as an offer (see Article 2, Paragraph 2 of the Act on Specified Commercial Transactions), to which the seller sends an acceptance e-mail, etc., which is considered to constitute a sales contract when it reaches the customer. After the acceptance e-mail is sent, the customer generally pays for the goods at the online store by credit card or online payment.

Once the sales contract is concluded and the customer has paid for the goods, the seller is basically obligated to fulfill its obligation to deliver the goods. If the seller fails to ship the goods or unilaterally cancels the order, it may be liable for default of the relevant sales contract.

To prepare for such a risk, it is advisable that the terms and conditions of the sales contract or the terms of use of the online store provide that the seller can unilaterally cancel the contract (cancellation) if the seller deems it inappropriate, such as when “false information is included in the order information. By stipulating in advance the cases in which the seller can cancel the contract, the customer is aware that his/her order may be cancelled when he/she places the order, and therefore, the seller cannot be held liable for default of contract.

In addition, there are many other matters that online retailers are obligated or required by the Specified Commercial Transactions Law and the Personal Information Protection Law, such as return policies and privacy policies.

Since online stores have contractual relationships with a large number of customers, there is a risk of various legal disputes. It is advisable to have an attorney draft terms of use and privacy policies to prevent problems that may arise from transactions in online stores.