Unhappy Returns: Do consumers expect too much?
Shoppers are already exploiting their increased consumer rights to the hilt. But now customer expectations of free returns are going above and beyond legal requirements and threaten to put many smaller retailers out of business. As 8% of shoppers admit to returning several items a month, do retailers know enough about their own rights, and when they can legally say no?
A recent survey revealed at least 200 online retail businesses don’t expect to survive the massive growth in returns this year. Many businesses revealed they were often pressured into paying the cost of returns around Christmas, even for unwanted items – or risk losing their all-important 5-star ratings.
Clearly shoppers are now keenly aware of their right to return any unwanted items bought online, under the Consumer Contracts Regulations 14-day cooling off period.
Fair enough, but half of all consumers now expect the same free returns that apply to damaged items to be given on unwanted items – or they will shop elsewhere. That’s not only far above and beyond current consumer rights, but could it break some of the nation’s favourite specialist online stores.
Retail giants like Amazon and ASOS are swallowing return costs
The public has become used to e-commerce giants like Amazon and ASOS often swallowing return costs; but they can literally make or break small traders struggling with wafer thin margins.
Whether they are selling online, or a traditional brick and mortar shop, it’s important for smaller businesses to know what they do and don’t have to offer when it comes to accepting returned goods.
The final nail in the coffin for small online retailers may be that 8% of shoppers now admit to returning items several times a month! And customers pushing the boundaries of the latest regulations mean it is often difficult for retailers to prevent ‘wardrobing’: using an item once for a specific purpose and then returning it.
Do retailers, and manufacturers selling direct to the public, know what exactly their own rights are? Are smaller retailers fully appraised of the differences between the Consumer Contracts Regulations and the Consumer Rights Act?
The survey of consumer and retailer returns expectations found a significant divide between the expectations of consumers and smaller retailers:
- Half of all shoppers believe retailers should foot the bill for all returns, even if they have simply changed their minds about the purchase
- More than 80% of consumers say they consider the returns policy prior to making a purchase, with more than half of them stating “it will make or break the purchase”. Only 6.9% of consumers said they never checked return options before buying.
- 8% of shoppers admit to returning items several times a month
- Over half of all shoppers who responded had been forced to return an item because it was faulty. That’s why 83% revealed they would be far more likely to shop again with a store that has a good returns policy
Returns take their toll
These heightened customer expectations are impacting on retailers. Several businesses responding to our survey had some concerning observations on the increasing impact of returns.
Said Imogen Shurey, founder of Velvet Cave: ‘People are so used to being able to return things to big stores easily and often free of charge so it’s difficult to compete. For a company with a huge turnover the money lost doesn’t make an impact but too many returns could spell the end for a small business.’
And so tight are margins for some retailers, particularly smaller online ones, that returns can easily wipe out any profit. Adam Brewer, founder of Gamerbilia, fears: ‘Returns have the potential to be financially damaging because in some cases you can lose all your net profit on an order if the customer returns it.’
It’s not just e-commerce sites that are impacted. Physical stores are also suffering from the returns revolution. One fashion store department manager fears e-commerce will one day kill off most High Street stores entirely:
He revealed: ‘Sales teams for particular departments make commission if they make 12%. However, returns come out of this total – including returned items from our online store. Internet returns are horrible! Some days we only have click and collect customers. I believe that any high street stores that do not close down will just be for customer service and collections; kind of like Argos.’
Even so, returns are not necessarily only a Bad Thing. Many retailers of all sizes are learning to embrace returns to stay in business. Pat Wood, founder of Truffle Shuffle, says: Allowing customers to return goods at their convenience is a hugely important enhancement of the 21st century shopping experience.’
With so much at stake, businesses need to know exactly what are the differences between the Consumer Contracts Regulation’s 14 day ‘cooling off period’ and the 30-day faulty goods Consumer Rights Act:
Consumer Contracts Regulations – 14 day ‘cooling off’ for online purchases
The Consumer Contracts Regulations replaced the Distance Selling regulations in 2014. These rights apply to online and mail order only. Key to these regulations is that people have a 14 day ‘cooling off period’ to think again about their purchase of goods or services.
The cooling-off period starts the day after the purchaser receives their order, and there doesn’t need to be anything wrong with the item for them to get a refund. Anyone with an unwanted gift must either return the item within 14 days or notify the seller in writing or email. In which case the customer has a further 14- day grace period to return it.
The buyer is responsible for returning the items within 14 days of cancelling and the seller’s refund must be paid within 14 calendar days after returning the goods, or receiving evidence that they were returned. Proof of postage should be sufficient evidence of returning goods.
There are caveats to this rule however.
Businesses can refuse returns if the products are:
- something that deteriorates quickly – like flowers or food
- an item that was personalised or custom-made
- anything from a private individual rather than a business
- a CD, DVD or software, if the seal is broken
- Pierced earrings and other items that are unhygienic to resell
Perhaps the most fraught area is unwanted gifts. To return these items the customer will need proof of purchase and the date ordered.
Admittedly it can be uncomfortable for the receiver to confess to relatives and loved ones that they would like to return their gift, but in the long run it’s better than having to wear that novelty sweater every time the buyer visits!
If a customer paid for standard delivery when they bought an item, the seller must refund this if the item is returned. If the shopper chose a more expensive delivery option, the purchaser will have to swallow the difference.
Stores have no legal obligation to accept unwanted return goods that are undamaged
High Street stores have no legal obligation to accept unwanted return goods that are undamaged – unless their terms and conditions say they will do so. But it is important to note that any returns offer a store makes. Such as free refunds on any December purchases until the end of January – becomes a legal requirement once it is made public.
Businesses can expect returns to be in a satisfactory condition and original packaging. A retailer can refuse a refund – or at least offer only a partial refund – if an item is so badly presented it is not salvageable.
The Chartered Trading Standards Institute (CTSI) says retailers ‘are allowed to refund less than the full amount – but only if the item has seen “unreasonable usage”. That means tags removed on clothes, or items returned without their original packaging, for example.’
Consumer Rights Act – 30 day return for faulty goods
High Street Stores are not obliged to offer a no quibble 14-day refund. Though many larger stores do in an effort to compete with e-commerce competition. But they must refund or replace damaged items under the Consumer Rights Act – as indeed must online retailers. There is a 30-day limit for a customer to either return the item or notify the retailer of a fault in order to gain an automatic refund or replacement of an item received damaged.
In order to qualify under the Consumer Rights Act 2015 it would need to be shown that the item was either:
- Not of satisfactory quality, eg damaged or faulty.
- It was not fit for purpose.
- Or not as described.
After 30 days, the buyer will not be legally entitled to a full refund if an item develops a fault, although some sellers may offer an extended refund period.
Even beyond the 30-day period buyers still have the chance of at least a replacement, and possibly a refund for the faulty item. If it is discovered an item is broken beyond the 30-day automatic limit for returning faulty goods, but within the first six months, it is presumed the fault has been there since the time of purchase. Unless the retailer can prove otherwise.
If an attempt at repair or replacement by the retailer has failed, the customer has the right to reject the goods for a full refund or price reduction in this six-month period. However, the better news for businesses is that if a fault develops after the first six months, the burden is on the buyer to prove that the product was faulty at the time of delivery.
Even if the purchaser bought the item in a store during a sale they are still entitled to their full rights – providing they were not told about the faults when they bought the item.
The retailer is responsible for goods until they have been accepted by the buyer
The retailer is responsible for goods until they have been accepted by the buyer – or someone appointed by the buyer. This means that retailers are liable for the service provided by the couriers they employ. The delivery firm is not liable (sorry!) and nor is the manufacturer.
The manufacturer of the product may well have legal warranties that go beyond basic UK legislation, but any warranty will not invalidate UK law and, while inside the 30-day period, the seller is responsible for refunds or replacements.
One good return deserves another sale
Returns management need not be an entirely negative part of your business. With 85% of consumers saying they actively look to shop with retailers who have a good returns policy, clearly returns can be a positive tool for retailers.
David works with Parcel Hero, a UK parcel delivery company. They have a business guide of how to handle returns, which is a growing problem for small retail businesses. Click this link to download the free guide.
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