01 February 2020
Even if you run a successful e-commerce or retail business, there will be customers who are dissatisfied with their purchase. A Return and Refund Policy offers them a remedy when they face these situations.
It helps your business bottom line too by showing that you care. Your policy also affects your customer retention.
However, there's a risk of fraud in returns and refunds.
Customers may buy an item with only short-term use in mind or attempt to hold you responsible for the damage they caused.
Time limits help with this by enforcing decision-making but also reducing the chance of returns after items are well-used. Return windows of 14, 30, and even 90 days after purchase reduce the possibility of these bad faith returns.
There are consumer protection laws that control these return windows. Here is why you should be cautious with your time limits in your Return and Refund Policy.
The primary purpose for Return and Refund Policies is the preservation of customer relationships - customer retention.
Even with all precautions taken, there's a likelihood that one of your products may not work as expected. It's also possible the item will not appear the same way it does online.
Both of these options can prevent a customer from being happy with their purchase from your store.
When customers experience shortcomings, they want solutions. One solution includes the right to return an item for a refund.
Return and Refund Policies also make purchases more likely. If a customer considers a new item, they want to purchase it risk-free in case it does not work out for them.
This kind of policy from your store offers that reassurance.
Finally, in some countries, Return and Refund Policies are required by law. That includes set time periods for allowing a return and refund.
It's important to know these laws so you do not risk penalties.
Most countries leave Return and Refund Policies to the discretion of the store.
However, there are jurisdictions where you need to draft a clear policy and offer minimum time limits for allowing returns and refunds.
There are no federal laws requiring retailers to allow returns and refunds in the US.
As such, there are no minimum return windows specified by federal statutes either.
States may have different requirements.
California, for example, requires stores to post their Refund Policy in a conspicuous place unless they offer full cash refunds or store credit within 7 days of purchase.
If a store does follow this requirement, customers may return items for a full refund within 30 days of a purchase.
Notices are not required for perishable food items or sale products marked "All sales final."
Florida enforces similar requirements.
If a store does not post a conspicuous notice indicating that returns and refunds are not allowed, then the customer may return goods for a full refund within 7 days of a purchase.
US state laws are mainly concerned with notice requirements.
Return windows for customers to receive refunds vary by store and state. These policies and any time limits on them exist mainly for goodwill rather than legal reasons.
Stores often provide return and refund policies are that consistent with their values and appropriate for their products.
The U.K. is unique in that it has a specific law regarding returns and refunds, the Consumer Rights Act 2015.
It entitles customers to a refund, replacement or repair when the item they purchased is faulty or does not resemble its online or catalog description.
If the store has no right to sell the item, due to no licensing or expertise, customers may receive additional funds beyond the purchase price if they suffer a defective product.
The UK law doesn't require a return or refund if the items are not faulty.
Examples include clothing that fails to fit, unwanted gifts or mere mind changes.
There are exceptions on Internet or mail order items since it's often impossible to determine quality by photos alone.
That's why Return Policies for online stores are often more generous than those posted in a retail store.
Another law, the Consumer Protection from Unfair Trading Regulations 2008, makes it a criminal offense to mislead customers on their legal rights.
Under that law, you cannot make any of the following statements in your Return and Refund Policy:
Even stating "No refunds unless goods are faulty" is illegal even though that's true under the law.
Avoid statements that are too limiting as well as those that are untrue.
Like the U.S., Australian law allows retailers discretion when determining Return and Refund Policies - including time windows.
Australian consumer law offers many rights to your customers but the guarantee for a refund is not one of them.
If you sell products in Australia, you have the option to repair an item if it has a minor problem.
You can also offer a replacement instead of a refund if the item sold is seriously flawed.
As in the U.S., if you wish to offer a Return and Refund Policy, that is within your discretion.
However, stores cannot state that they do not give refunds under any circumstances.
You also cannot refuse to help a customer who has a defective product unless they knew it was faulty at the time of purchase.
Therefore, it's safe to assume that you cannot rule out refunds entirely and you need to develop a way to help customers who come across defective products.
Except where indicated, time limits on returns and refunds are stated within a Return Policy.
When you are on the website of an e-commerce store, you can find the policy in a footer link or within a FAQ.
Since there are no minimum time limits for returns in the U.S., either on federal or state levels, you find diversity in Return Policies from U.S. stores.
Amazon offers the same 30-day window for American consumers as it does for U.K. customers, but also offers a longer holiday return deadline.
This shows flexibility to address specific circumstances, like the holiday return rush:
There's also flexibility in determining the validity of a return.
Nordstrom is known for selling high-quality items. Its return policy does not contain time limits but consumers are required to contact customer service first to authorize a return:
Target offers a general return deadline of 90 days. But it offers additional time limits depending on the type of product.
For example, items with the Target brand can be returned within a year after purchase but electronics must be returned within 30 days. You find other deadlines after clicking the "view return policy for more details" link:
When you decide on a time limit for returns and refunds in the U.S., you have more flexibility than if you sold items in the U.K.
As long as you are conspicuous with your policy and comply with applicable state laws, you can create a Return and Refund Policy that works well for your store and industry.
Since the UK law provides concise time limits, you find the least variety from U.K. retailer websites.
When you find something different, it's because the retailer offers more time than the law requires.
Amazon UK states its 30-day return deadline window at the top of its return policy. This keeps it in compliance with the Consumer Rights Act 2015:
Tesco is one of the largest retailers in the U.K. Also in compliance with the Act, it indicates a 30-day return window for items and applies the 14 days to digital purchases (in this case, mobile phone contracts):
The UK law makes it clear that stores can offer more rights to consumers than required.
Marks and Spencer, a well-known department store, offers a 35-day return and refund window. This applies to both U.K. and U.S. markets:
The following examples either meet minimum time limits or offer additional time.
Unfortunately, with its return window of 28 days, H&M may not be in compliance with the consumer laws:
If you sell products in the U.K., indicate a minimum return time window of 30 days.
Even if you don't require purchases to be returned in a set amount of time, offer an inflated deadline or make it clear there's no time limit.
Unlike other countries, U.K. makes this a requirement for Return and Refund Policies and you do not want to risk penalties.
Since the law does not impose standards for time limits on returns and refunds, the policies are different between retailers.
This can include no time limits stated in the policy.
For example, Woolworths, Ltd offers products in many retail sectors but when you visit its detailed return policy, customers can return items at any time after purchase.
Customers just need to visit a store or contact customer service.
Other large retailers are stringent.
Booktopia limits its return window from two to five business days after delivery date or purchase:
The New Internationalist Shop sells items to raise funds and buries its return policy under the heading "Guarantee." In this one-sentence description, it at least grants customers a 14-day return window to receive a refund:
Horseland, a retailer selling equestrian equipment, also applies 14 days to its online purchases. There does not appear to be a return deadline for purchases at their stores:
Much as in the U.S., Australian retailers use the lack of regulation to promote flexibility in their return and refund policies.
This applies to time limits as much as actual terms. This is why you see return windows that vary from unlimited to just a few days.
Even if you are not selling in the U.K., where you're required to state the time window, it's best to offer a time limit on returns and refunds and make it clear in your policy.
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.