A guide to product returns and the consumer contract for online retailers
As an ecommerce business, its crucial to get your product returns policy right. Here, Grid Law founder David Walker considers the consumer contract from an online retail perspective.
I was interested to read that 2082 could be the year that ecommerce finally kills off the high street for good. Who knows whether this will ever happen, but it got me thinking I can’t actually remember the last time I advised a client about setting up a bricks and mortar retail business.
It seems like everyone wants to be online, so even if the high street isnt completely wiped out, shopping in the future will be a very different experience to what it is now.
Consumer laws will have to keep up with these changes but from a legal perspective, making a purchase online is already a very different experience to visiting a store.
This is because when you visit a store you can examine the products, discuss your needs with the staff and make an informed decision about whether or not to make the purchase. When you buy online, your opportunity to do this is extremely limited so the law compensates by giving consumers far more rights to return products if they’re not what was expected.
When Im advising online retailers, it’s these returns policies that cause the most confusion and controversy.
Just think about your own, vastly different experiences when you buy products online. Some businesses are easy to deal with and make returning products simple whilst others are the complete opposite. They make you jump through so many hoops you wonder whether it’s worth the effort.
So, why is there such inconsistency between businesses?
What does the law say about returns policies?
As an online retailer, you need to know what your minimum obligations are, and this is what we are going to look at in this article. But, before we do, I want to say that this is huge topic and I can’t cover every eventuality here. So, Im just going to look at this from a business to consumer (B2C) perspective when selling only products online.
Different rules apply when you’re selling a mix of products and services, or making digital content available for download or streaming. If you have any questions about these, please feel free to email me and Ill happily answer them for you.
When does a consumer have the right to cancel their contract and return the goods they purchased?
A consumer’s right to cancel their contract and return the goods they purchased doesnt apply to all transactions. This right applies when:
The contract is between a trader (business) and a consumer. It doesnt apply to business to business (B2B) contracts; and
it’s not an excluded contract. (There is a long list of excluded contracts but most of these you wouldnt think of as goods anyway, for example, financial services, gambling contracts and rental accommodation to name but a few); and
It is a distance? or off-premises? contract. The law gives very detailed explanations of what distance? and off-premises? mean but in most cases, it’s going to be an online purchase.
There is also a long list of excluded goods that cannot be returned. These are products such as those made to a customer’s specification or that have been personalised; products that are likely to rapidly deteriorate or expire (for example food); and products sold at auction.
Sometimes a customer will have the right to return products but will lose this right. For example, products such as cosmetics will be sealed for health and hygiene reasons. If a customer breaks the seal and opens these products they cannot be returned.
If a customer has the right to cancel the contract they can do so without giving any reason for this. it’s perfectly acceptable for them to simply change their mind about the purchase.
__________________________________________________________________________________ How to write legally binding online terms and conditionsDavid Walker returns to explain the ins and outs of online terms and conditions, and when ticking the I agree? box becomes legally binding.
How long does a consumer have to cancel their order and ask for a refund?
The standard cancellation period starts when the contract is entered into and ends 14 days after the goods come into the possession of the consumer (or the person who the consumer said they were to be sent to, for example, if they were a gift and sent to someone else).
If the order is delivered in multiple consignments, the cancellation period ends 14 days from when the final consignment is received.
When counting the number of days, weekends and public holidays are included but if the last day of the cancellation period is a weekend or public holiday, it will be extended to the next working day.
A word of warning here. As an online retailer, you have a legal duty to provide your customers with a certain amount of pre-contract information. This includes explaining that they have the right to cancel their order (assuming the conditions above apply), any conditions attaching to this right, the time limits for exercising these rights and the procedures for exercising it.
If you don’t provide all of this information the cancellation period can be extended by 12 months.
How should a customer exercise their right to cancel their order?
There’s no set way in which a consumer has to indicate their right to cancel their order. Many retailers put a form on their website for consumers to complete but they don’t have to use it. Instead, consumers can write, email, telephone or simply send the goods back so long as they have made it clear that they are cancelling their contact.
David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.