Return Policies and Refunds

Nearly every consumer has returned a purchased item for a refund, exchange, or store credit at least once. The experience is usually uneventful, but sometimes, returns don't go as expected.

Merchants are not required to accept returns unless there is a defect, in which case an implied warranty may cover it. Still, state laws govern the disclosure of refund and return policies.

The following information covers the basics of refunds and return policies in general. See FindLaw's guide about warranties and returns for more details.

Disclosing Refund Policies Under State Law

Many states have specific consumer refund laws. Most laws concern in-store and telemarketing sales. Some states don't clarify how their laws apply to online sales of goods from out-of-state sellers.

Below are some examples of state laws for refunds:

• California: Merchants must post their refund policy unless they offer a full cash refund, exchange, or store credit within seven days of the purchase date. If they don't post one, customers may return goods for a full refund within 30 days of the purchase.
• Florida: Merchants not offering refunds must give notice where customers can see. If they fail to post a notice, customers may return goods for a full refund within 20 days of the purchase.

Usually, a merchant must prominently display its return and exchange policy at the place of purchase, such as near the cash register or on its website. Otherwise, the policy may be invalid.

Restocking Fees

Merchants may charge a restocking fee for returned merchandise, which covers packaging costs to sell it as new. State laws determine whether sellers must tell customers about these fees before they purchase.

For example, New York retailers must display their restocking fee policies before the point of purchase. New Hampshire, on the other hand, does not require this notice.

What Does a Store Return Policy Include?

Retailers that create their own refund policies usually set terms that can affect returns, such as:

• Time limits for returns following the date of purchase
• Return limitations for particular products, such as final sale items or perishable goods
• The process of returning the item, such as in the store or through a specific delivery service
• The method of refunding your money, such as through store credit or your credit card
• Deducted costs from the refund
• Whether returned items must be in the original packaging
• Whether you must show proof of purchase, such as the receipt or order number

Some products and services have unique terms, such as memberships and negotiated sales contracts. Before you buy anything, make sure you fully understand the terms and policies that apply if you change your mind later.

Does Federal Law Require Return Policies?

No federal law requires a merchant to refund money based on buyer's remorse. A customer's changing preferences are not the fault of the merchant.

For example, a customer might want a bigger television screen than the one they bought. They cannot use a federal law to hold the seller responsible for this change.

Most large retailers offer refunds through one policy they use across the United States. This approach provides efficiency and avoids confusing customers in different states, but no federal law says that a seller must use the same store policy across states.

Federal Trade Commission (FTC) and Deceptive Claims

Federal law provides some limited options to consumers through the Federal Trade Commission (FTC). The FTC enforces federal consumer protection laws to prevent fraudulent, deceptive, or unfair business practices.

This agency will sue companies that make deceptive claims about their products or services. When possible, the FTC tries to get refunds when it settles a case for consumers who lost money.

Remember that these refunds relate to deceptive or unfair business practice regulations, not state refund laws. Most refund cases tend to be a state law contract issue.

FTC and the Cooling-Off Rule

The FTC also enforces a Cooling-Off Rule, mainly affecting door-to-door sales. It gives a consumer three business days to cancel some purchases made at a person's home or workplace. It also covers facilities rented by the seller on a temporary short-term basis, such as fairgrounds.

The Cooling-Off Rule has many exceptions. For example, it does not cover purchases made entirely by phone, mail, or online.

Customer Return Fraud

U.S. retailers may lose revenue from return fraud. Sellers often throw away or mark down the price of returned merchandise. They often incur hidden costs, such as employee labor, when restocking products at a large scale.

There are many ways customers can defraud a merchant through the return process. Consumers who commit return fraud may face shoplifting or theft charges.

It can be hard to tell return fraud apart from legitimate returns. For example, someone who struggles to decide what clothes to buy might make frequent returns. They aren't trying to game the system, but someone defrauds a retailer when they buy a formal outfit and wear it once for a night out, returning it the next day.

Types of Fraudulent Returns

Below are some common types of return fraud:

• Wardrobing: Buying clothes or other items for one-time use and then returning them
• Stolen Goods: Returning goods shoplifted at the same store or stolen elsewhere
• Fraudulent Receipts: Using a reused, found, stolen, or altered receipt to return goods or returning goods to a store with a higher price to make a profit
• Employee Fraud: Manipulating or getting assistance from within the company
• Price Switching: Affixing a higher-priced tag on an item in hopes of returning it for a bigger refund

Criminal charges require evidence that an actual crime took place. For example, wardrobing may be hard to prove, but surveillance video of someone removing price tags could be enough evidence to charge them.

Call a Consumer Protection Lawyer

If you have further questions about refund laws, consulting with a qualified consumer protection attorney may be in your best interests. They can also help you determine whether you have a legal claim involving a purchase.