The Fubra Blog
Furnish.co.uk – how we take payments for sellers but avoid legal liability
In case you haven’t heard of us, furnish.co.uk is a home interiors personal shopper. We take the hard work out of shopping for your home by pulling together the best and most stylish furnishings from across the web. We work with multiple “sellers” and list a selection of each of their products, every one of which is hand-picked by us. Take a look to find everything from modern furniture through to gifts for the home.
We offer several partnership options to sellers, but the one I’ll talk about here is where we sell their home furnishings directly from furnish.co.uk, just like a marketplace. For example, a customer finds a coffee table on furnish.co.uk from a particular seller, adds it to their basket, checks out and pays, all without visiting the seller’s own website. The seller is notified of this and dispatches the coffee table to the customer. We take a commission on the sale.
A legal minefield
Technically, this is relatively simple. But it’s a legal minefield if done the wrong way. Any business that takes payment for goods becomes accountable under the Sale of Goods Act 1979, Distance Selling Regulations, etc. Several websites such as Not On the Highstreet appear to do precisely this with home furnishings; they take payment from the customer, pay the seller a proportion of this and keep the rest. They then attempt to contract out of their statutory obligations in their terms and conditions, insisting that it is in fact the seller who is liable in the event of problems. However, in my view and that of my solicitor, if this were ever legally challenged, it would fail. Legislation to protect consumers cannot be ousted by private agreement. It’s the equivalent of those shops who put a “No Refunds” sign in the window. The situation is that, like it or not, if a company accepts payment for goods, there’s a whole load of legal baggage that comes with that. In the eye of the law, they’re a retailer and there is nothing they can do to change this.
Paying the seller, not us
The only way to remove legal liability is for the customer not to pay us at all. They must pay the seller, who then quite rightly takes on the legal burden, and we charge the seller our commission afterwards. For this to work transparently, we need to perform some technical magic such that (1) the customer’s user experience of paying feels normal and natural, even though they’re paying the seller rather than us and (2) the whole process is automated, so we don’t need to get involved in manual invoicing and placing orders for home furnishings with sellers. In this way, it feels almost identical to if the customer paid us directly, except we avoid any legal liability. We do this as follows.
Paypal API
Every seller that comes on board must set up a dedicated Paypal account. If, say, a customer buys some modern furniture on furnish.co.uk and checks out, they’re taken to the seller’s Paypal page, not ours. The customer feels comfortable with this, as they just see a Paypal page. Nothing abnormal there. As far as the customer is concerned, their work is now done. But there’s more to the technical process.
The seller’s Paypal account is configured such that furnish.co.uk gets an automatic notification through the Paypal API when a purchase takes place. This information is then automatically processed, the commission due calculated and a tally kept of commission due for each seller. Because we can also automatically monitor payments made to our own Paypal account and by who, we also know when a seller has paid us our commission. So we can calculate the total a seller owes us by taking the commission owed from all sales and subtracting from it the total paid to us. The seller is automatically emailed regularly with the outstanding balance. The email to the seller contains a link that directly opens Paypal on a page ready to transfer the sum owed into the Paypal account of Furnish.co.uk. The seller simply needs to click a confirmation to make the transfer; it couldn’t be easier for them.
In the event the seller doesn’t pay within the allocated time, we have some powerful options available. We could remove the seller from Furnish, thus cutting off their income from any furniture sales on furnish.co.uk, or even contact the customer, so it’s simply not worth it for a seller to act dishonestly. An added beauty is that a seller is welcome to top up their payments to us at any time to avoid any risk of underpayment, just like topping up your mobile phone credit.
Ensuring automatic notifications happen
A flaw in the plan is that a seller *could* secretly switch off the automatic notifications from their Paypal account such that furnish.co.uk thinks that no sales are happening when they actually are. There’s an answer here too, which we’ll be implementing shortly. Every few days or weeks, we’ll automatically make a random payment of just a few pence to each seller’s Paypal account. If their notifications are set up correctly, we’ll be notified of the payment we made and we’ll just reduce the amount owed by that seller by the few pence we transferred. But in the event we don’t get notified of the payment we made, we’ll know that the seller has switched off the automatic notifications, and we can then deal with this accordingly.
I should mention that all of the above functionality is presently in development, but it’s looking good. I’ll let you know how it goes in a future post.
