31 January 2020
The EU and its member states take consumer protection seriously. In the EU, you need a Return & Refund Policy that is not only in compliance with EU laws, but that also thoroughly informs customers of your return and refund practices.
You need to make your return conditions, exceptions, and customer rights well know to your customers.
While you are not required to issue a refund or provide repairs in all cases, chances are you will face these obligations in most cases.
Here is a review of relevant EU laws and how they will affect your Return & Refund Policy.
The EU heavily regulates returns, refunds, and product guarantees and member states pass laws that reinforce that.
If you sell in the EU, your business will benefit from having a Return & Refund Policy that not only informs your customers but also shows you are in compliance with the laws.
A Return & Refund Policy indicates how a customer can secure a return or refund or exchange an item.
This policy normally contains provisions regarding return timeframes, order cancellation procedures, steps for reporting defects, and any conditions or exceptions to returns and refunds.
The Return & Refund Policy can either be its own online document, or provisions included in the Terms & Conditions agreement. Most retailers do both but often prefer outlining their Return & Refund Policy in a FAQ format that is easy for customers to read.
In the Terms & Conditions agreement, the return and refund provisions often occupy one or two sections.
H&M , a popular U.K. clothing retailer that does business worldwide, addresses returns with a section on withdrawing orders and explaining returns. It also provides a link to the separate Return Policy available to customers online:
The Return & Refund Policy for H&M starts off with how returns are completed and indicates timeframe for returns right away:
Marks and Spencer, a larger retailer in U.K., is known for its goodwill policy when it comes to returns.
This is the general description of the goodwill in the "Terms & Conditions":
The same policy is also located in the Return & Refund Policy page and a FAQ page:
The reason retailers often put the Return & Refund Policy in both the Terms & Conditions and a separate document is to assure clarity, but this placement also helps ensureÂ acceptance of the terms.
Customers accept the Terms & Conditions through clickwrap when they make a purchase. Through that action, they also accept the terms related to returns and refunds.
The same acceptance is not guaranteed if the Return & Refund Policy is limited to its own FAQ page.
EU Directives place requirements on retailers but also demand that particular content be included in the Return & Refund Policy so consumers will be informed.
The newest legal requirement - the Consumer Rights Directive - is particularly strict when it comes to protecting consumers.
The newest directive, Consumer Rights Directive, passed on June 14, 2014. It created new responsibilities for retailers and enhanced current protections for consumers.
These provisions apply to all cross-border transactions in the E.U., and member states also apply them to their domestic transactions.
The Directive added the following details to protect consumers:
The intention of the Consumer Rights Directive is to create complete transparency between retailers and consumers.
Having a Return & Refund Policy is not only required but it's the best way to assure you are upfront with your customers about your practices, and that and you are following this directive.
The Consumer Rights Directive moved many international companies to change their Returns & Refunds Policies.
Apple did not have a clause in its Return & Refund Policy allowing refunds for its digital content if customers found it unsatisfactory.
Then, Apple updated its Terms & Conditions agreement to allow a refund for digital content if it is requested within 14 days of purchase. The same provision is not present in the Terms & Conditions agreements of Apple for Canada and the U.S.
EU rules also impose a two-year guarantee for all purchased goods. This applies to merchandise purchased in shops, by mail order or online.
Any goods that turn out to be defective or do not look or work as advertised must be repaired, replaced or refunded. The refund option is only available if it's impossible to replace or repair the item.
Customers must inform you within a reasonable time of faulty goods. Depending on the country, this timeframe is 2 to 6 months. Once the retailer is notified of the faulty good, the retailer must provide a solution. Many retailers often include multiple solutions in their Return & Refund Policies.
As a store owner, you need to have a faulty goods guarantee and an easy way for consumers to report defects.
Many retailers allow reporting to be done online or provide a telephone number so these matters can be addressed immediately.
All the member states have their own consumer rights laws that must offer the same protection as the EU directives or more.
The U.K. provides a good example.
The U.K. consumer protections are present in the Consumer Rights Act 2015. Customers are entitled to refund, replacement or repair when they discover faulty goods or discrepancies in the online or catalog description. This is consistent with EU laws and regulations.
The UK Consumer Rights Act of 2015 imposes a timeframe for making a return and requesting a refund of 30 days. Digital content is limited to 14 days for the same request.
Returns and refunds are not mandatory if the merchandise is not faulty.
For example, if a customer decides she no longer likes the color of an item or discovers clothes she purchased does not fit, the retailer can refuse a refund.
Mail order and online purchases are exceptions to this rule since it is often difficult to determine quality from mere pictures.
The U.K. also has the Consumer Protection from Unfair Trading Regulations 2008. This law requires retailers to be careful since a violation can result in criminal penalties.
Retailers are prohibited from misrepresenting their rights to consumers.
If you transact sales in the U.K., you cannot make any of the following statements in your Return & Refund Policy:
Even true statements can be illegal. For example, "No refunds unless goods are faulty" is not permitted because it is too limiting. This is why many U.K. retailers default to generous Return & Refund Policies.
EU laws make a Return & Refund Policy a requirement. Since the Return & Refund Policy is a helpful tool for informing consumers and showing you comply, there's no reason you should avoid having this policy.
However, you need to be certain it contains complete content.
As explained above, the EU Consumer Directive allows consumers a right of withdrawal from their purchase within 14 days of the purchase.
Retailers are required to provide this information to their customers. Failure to do expands that right from 14 days to one year.
There's no doubt that you must implement that in your Return & Refund Policy.
H&M is very thorough with alerting consumers of this timeframe.
The right to withdrawal is referenced in H&M Terms & Conditions agreement, at the opening paragraph of H&M Return & Refund Policy, and at the end of that same policy. It makes the effects of withdrawal and the resulting refunds clear:
The right to withdraw also includes other return deadlines. H&M did this above, but this is a common practice.
Adidas UK includes its generous 100-day return timeline along with the 14 day withdrawal period for online purchases. It also refers to its Terms & Conditions agreement for more information:
Marks and Spencer also includes the 14-day withdrawal period with its generous 35-day goodwill return window:
While the 14-day withdrawal right is very important, keep in mind that it only applies to online transactions.
If items are purchased in a storefront, customers do not have the right to withdraw although they can make in-person returns and request a refund.
It's acceptable to place conditions on returns and refunds. This protects your business interests and prevents abuse by unscrupulous customers.
Some conditions are simple.
Adidas UK requires a receipt to process returns of retail store purchases:
For both online and retail store purchases, Adidas lists other conditions and exceptions:
There are also exceptions, like customized products and toiletries:
IKEA, the Swedish furniture company, deals in larger items than clothing or electronics. Owned by an EU member state that sells to others, it must also offer a Return Policy compliant with EU laws.
IKEA conditions for returns include products being unused and in their original packaging. However, it also accepts assembled items as long as they can be sold again.
If defective, it will allow the return but IKEA will likely require an exchange or only store credit if the piece is not defective:
Retailers that sell a diverse array of products often list more conditions and exceptions.
For example, perishable goods like food and plants are often not allowed a refund.
Marks and Spencer offers a list of conditions and exceptions, but also allows discretion when it comes to large items like furniture. Yet it keeps the discussion open to helping customers, even with perishable goods:
The only time a store must accept all returns is for defective products. Any other reasons are subject to your discretion. Make exclusions and conditions clear so customers know what to expect.
Mentioning that you will accept returns or offer a repair for defects shows compliance with the EU Directives.
It's also helpful to you and your customers if you provide a clear procedure on how customers can return faulty goods.
This is important because while you have discretion in other circumstances, your store must offer a remedy if your merchandise is faulty.
You may wish customers to call a particular number or reach you through an email address that is set aside just for handling defective merchandise.
Marks and Spencer offers a quality guarantee and multiple solutions in case of defects. This is listed in detail in the Return & Refund Policy:
When customers receive defective merchandise, you want to handle the matter in a clean and efficient manner. Separate contact information and clear procedures help that and show you are in compliance with the faulty goods guarantee. Your customers will also appreciate the clarity and ease at handling their already-frustrating situation.
If you are an EU retailer or a foreign company that sells goods to EU citizens, it's important to have a complete Return & Refund Policy.
While other jurisdictions allow more discretion in return and refund terms, the EU and especially the U.K. have strict guidelines.
This article is not a substitute for professional legal advice. This article does not create an attorney-client relationship, nor is it a solicitation to offer legal advice.