Skip to main content

Many Less Than Happy Returns: The Small Business Guide To Returns

New research from ParcelHero has revealed at least 200 retail businesses don’t expect to survive the year because of the huge increase in returned items. Exacerbating the problem is the fact half of all shoppers believe retailers should foot the bill for all returns, even if they have simply changed their minds about the purchase.

Free returns mean businesses operating on tight margins lose all profit on a product – and may even be left out of pocket on the sale.

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.

And the worst news for hard-pressed business is that 8% of shoppers admit to returning items several times a month.

UK consumer law has grown increasingly complex in recent years as it had adapted to incorporate European Union regulations as well as evolving UK legislation. What are the full rules surrounding returns and how they impact on businesses?

Everyone involved in commerce needs 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. 

What retailers can refuse:

There are some notable exceptions 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

 

Delivery options

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! 

What retailers can refuse:

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.

 

High Street stores

What retailers can refuse:

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.
 

Non-original packaging

What retailers can refuse:

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) told ParcelHero 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.’

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.

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.

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.

What retailers can refuse:

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 
  • Not fit for purpose
  • Not as described.

If an item does not meet one of these categories it is probable the retailer can refuse to refund or replace the item.

 

Beyond 30 days

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. 

What retailers can refuse:

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. 

 

Items in transit

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 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.

 

A business guide to returns

Returns management need not be an entirely negative part of your business. With 85% of consumers telling ParcelHero they actively look to shop with retailers who have a good returns policy, clearly returns can be a positive tool for retailers.

There’s much more information in our guide, including options such as offering vouchers rather than cash refunds. Download the free guide now at: parcelhero.com/blog/marketplace/business-guide-handling-returns
 

David Jinks MILT is Head of Consumer Research for the online parcel broker ParcelHero. He is lead author of 2030: Death of the High Street, and appears regularly on national radio and in the national press discussing the impact of e-commerce; as well as topics such as the potential consequences of Brexit for exporters, and music festival logistics. He regularly presents for the UK Government’s Department for International Trade’s Exporting is GREAT initiative. David has over 20 years’ experience as a transport journalist, and was formerly Publisher of The Chartered Institute of Logistics & Transport’s Logistics & Transport Focus magazine.

Share this content

Leave a Reply

Register with Informi today:

  • Join over 20,000 like-minded business professionals
  • Create your own personalised account with curated reading lists and checklists
  • Access exclusive resources including business plans, templates, and tax calculators
  • Receive the latest business advice and insights from Informi
  • Join in the discussion through the comments section

or

I’ve been working through the how to start a business in 20 days ebook and so many of the things I’d done are now nicely tied together and some gaps now filled. I love the simplicity. Thank you.

Sarah Gosling – Gosling Charity Consulting