As the festive season is now upon us, customers will be shopping in-store or online for gifts for their friends and family. There is no doubt that both customers and businesses will want the shopping experience to be a smooth one.
Often problems arise when customers receive faulty gifts or gifts that did not meet their expectations so want to request to exchange or obtain a refund for the goods.
It is important that businesses are aware of the legal rights of customers to prevent any potential legal action being taken against them.
What are consumer rights?
The Consumer Rights Act 2015 (CRA) sets out consumer rights when buying products, services and digital content from traders.
A “consumer” is a person who purchases goods and services for personal use. A “trader” includes all businesses.
Under the CRA, when supplying goods, whether physical or digital, they must be fit for purpose, as described and of satisfactory quality.
How can businesses comply with consumer rights?
To comply, it is important that businesses who sell directly to consumers have provisions that incorporate the CRA, or if necessary the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR), in their Terms and Conditions.
When do customers have a right to a refund?
Under the CRA, customers may be entitled to a refund, replacement, repair and/or compensation where goods are faulty or not as described.
Customers are also entitled to a refund and/or compensation where a business has sold goods to them, but they had no legal right to do so.
If a customer has ordered goods online, by post or on the telephone, they have the right to cancel their order for a limited time even if the goods are not faulty in any event under the CCR.
When can a business refuse a refund?
Businesses do not have to refund a customer if they:
- Knew an item was faulty when they bought it;
- Damaged an item by trying to repair it themselves or getting someone else to do it (though they may still have the right to a repair, replacement or partial refund); or
- No longer want an item (for example because it’s the wrong size or colour) unless they bought it without seeing it (for example, ordered clothing online).
How do you handle a customer requesting a refund?
This depends on the type of purchase, whether in-store or online. Below I outline how to handle a refund request in both circumstances.
In-store purchases
If goods are purchased in-store and a customer requests a refund for a reason under the CRA, customers will be entitled to a full refund (in most cases) within 30 days.
After that, customers lose the short-term right to reject the goods and will have fewer rights, such as only being able to ask for a repair or replacement, or a partial refund if this doesn't work.
Different rules apply to digital goods.
Online purchases
For goods purchased online, businesses must offer a refund to customers if they have told them within 14 days of receiving their goods that they want to cancel.
Customers have another 14 days to return the goods once they’ve told the business.
Businesses must refund the customer within 14 days of receiving the goods back. Customers do not have to provide a reason why they want a refund.
Does my business need a refund policy?
If you want to offer consumers more than what the CRA offers when returning products, you may decide your business wants to provide consumers with a written refund policy.
When writing a refund policy, businesses can impose conditions, for example:
- The consumer must produce the original till receipt;
- Goods can only be return if they are unused/in unopened packaging;
- Certain timescales to return the goods; or
- Exchanges or credit notes can be offered instead of a refund.
A written refund policy can therefore offer businesses more flexibility and attract customers as it provides them with more transparency.
However, it is worth bearing in mind that businesses cannot impose these types of conditions where the consumer has a legal right under the CRA or CCR to return goods.
What happens if Consumer Rights are breached by businesses?
If a breach of the CRA or CCR occurs, businesses can be fined, made to comply with the CRA or CCR or criminal sanctions may even be imposed against them.
Corporate & Commercial Solicitors
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