Online retailers must refund outward postage on returned goods
A German court has ruled that online retailers must refund outward postage when customers return goods under their right to cancel. The case involved German retailer Heinrich Heine, who argued that German law said they did not have to refund their €4.95 delivery fee to customers who returned goods. The court ruled that if German law does make such a stipulation, then it is in conflict with European law and will have to be changed.
The European Distance Selling Directive says that “the supplier shall be obliged to reimburse the sums paid by the consumer free of charge. The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods”. Under the Directive, customers have seven days from receipt of goods to withdraw from the contract and return their order.
In the UK, the Directive has been enacted as The Consumer Protection (Distance Selling) Regulations 2000, which says:
14.1 On the cancellation of a contract under regulation 10, the supplier shall reimburse any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was made free of any charge, less any charge made in accordance with paragraph (5).
This is further clarified in the OFT’s leaflet on the subject
3.48 The DSRs require you to refund any money paid by or on behalf of the consumer in relation to the contract to the person who made the payment. This means the full price of the goods, or deposit or prepayment made, including the cost of delivery. The essence of distance selling is that consumers buy from home and receive goods at home. In these circumstances, almost every case of home shopping will involve delivery of the goods ordered and so delivery forms an essential part of the contract. [emphasis theirs]
We’ll be taking a more extensive look at the rules and good practice regarding returned goods next month, so if you have questions/observations, please do leave us a comment.
David Brackin says
1:52 pm on 22/04/2010
I’m surprised anyone has brought this case as the law is so clear in this area. The only doubt is whether the Act applies (private or quasi-private sales and auction-type sales).
At Stuff U Sell, we try to keep this simple. Postage is free. You get it back if you return the goods.
Perhaps a greater source of controversy and conflict between buyers and sellers is the Sale of Goods Act requirement to pay the return postage where the goods are defective and the seller elects for a refund on return.
It’s not well handled in eBay’s Resolution Centre (and indeed, we have a number of concerns with the new Resolution Centre, as launched last month), but we typically offer to send a courier to collect items at our expense where we need something back for a SNAD refund.
Sue Bailey says
1:56 pm on April 22nd, 2010
Clear, David, yes, but not always adhered to.
Gary says
3:15 pm on 22/04/2010
What about the restocking charge?
This could ammount to the value of the return postage. Many online sellers include this in their terms and it does seem entirely reasonable as bricks and mortar sellers also apply this.
Sue Bailey says
3:20 pm on April 22nd, 2010
If retail customers are returning goods under the Distance Selling Regulations’ right to cancel, you cannot charge a restocking fee.
See the OFT leaflet as above, para 3.55:
The rules are entirely different for online/mail order sales and B&M sales, since in the latter, buyers have the chance to examine the goods.
Gary says
3:25 pm on 22/04/2010
Private sales and auctions (even those of business sellers) are not subject to the DSR’s. eBay should make this much clearer to buyers. Auctions have always legally been a buyer beware type situation no matter how eBay dress this up. Those auction sellers who do not care about feedback are not obliged to do anything!
It would be interesting to see the outcome of any auction seller court case against Paypal or eBay in the event of a seller objecting to eBay or Paypal making a refund out of the sellers pocket.
Gary says
3:31 pm on 22/04/2010
Think of the Michael Jackson concert ticket auction scenario. I wonder how many eBay sellers eBay or Paypal have taken to court to recover the refunds that eBay have made on the sellers behalf out of eBay’s or Paypal’s own coffers?
None becuase if they did they would loose and it would set a precedent.
BigPoppa says
3:43 pm on 22/04/2010
If you offer free postage along side other postage options, and the buyer chooses an option that is not free, you do not have to refund the postage.
You can charge a restocking fee when accepting returns outside of the required timescales (bad business to do so though IMO)
Sue Bailey says
3:45 pm on April 22nd, 2010
Both good points, BP. I particularly dislike people who say “… this does not affect your statutory rights”. Merchants *do* have the obligation to inform customers of their right to cancel too.
BigPoppa says
3:46 pm on 22/04/2010
It’s also worth noting that if you would not normally examine the product, lets say in a shop then the DSR’s “may” not apply.
Sue Bailey says
3:52 pm on April 22nd, 2010
Can you cite the legislation/official line on this, BP? It’s not anything I’ve ever seen before. What kind of goods are we talking about?
Gary says
3:49 pm on 22/04/2010
What about sales from within the UK to outside the UK?
And sales from outside the UK by overseas sellers to the UK?
How can European DSR rules apply to items that begin or end outside Europe?
Again this puts the good old hard working UK seller at a big disadvantage.
Ebay should only permit sellers who are not normally covered by the DSR’s to sell on eBay UK if they tick a box agreeing to pay return airmail postage if goods are returned within 30 days of airmail shipment.
Sue Bailey says
3:51 pm on April 22nd, 2010
All EU member states have implemented the Distance Selling Directive, so e.g. a British seller and a French buyer are in the same position and a British seller and a British buyer.
Keep em coming, people – particularly any places where the law or its application isn’t clear.
Urban33 says
4:15 pm on 22/04/2010
So did I read correct that if we offer free postage but someone opts for the next day paid option we don’t have to refund that?
Stu
Sue Bailey says
4:19 pm on April 22nd, 2010
Possibly; check the OFT leaflet as above para 3.49 –
So at very least, you would need to word your T&Cs carefully to achieve this. I’m not absolutely sure what “specifically requested” or “provided under a separate contract” means – is ticking a box enough? It doesn’t seem like it to me.
Bunchy says
1:09 am on April 23rd, 2010
I would take “specifically requested” to mean the buyer chooses express delivery from the choice of delivery prices/services available.
And
“provide under seperate contract” to mean that it’s not a standard service and by it’s nature made to be seperate for the purpose of ensuring faster delivery.
(no, I don’t get that last one either)
Sue Bailey says
1:13 am on April 23rd, 2010
Bunchy, I definitely disagree with you on the contract thing. If it’s ordered as part of the same deal, paid for as part of the same deal, in one payment, dealt with at the same time, in the same checkout flow, with the same emails and so on ….
how can it be anything but the same contract?
But I will see if we can get clarification – it’s what happens when the people who write the rules have never run a website themselves.
Gerry007 says
1:41 am on April 23rd, 2010
Sue
I am sure you mean have NEVER RUN A mail order BUSINESS’
Hereford United Fan says
7:55 pm on 22/04/2010
I have a question that is along the same lines.
Is there any way to avoid the VAT? My understanding is that I have to charge VAT on the postage element of the total cost as for mail order businesses it is considered part of the deal. I spend £60,000 a year on postage so this is a big chunk at 17.5%.
Sue Bailey says
8:06 pm on April 22nd, 2010
Ouch. I don’t believe there’s any way out of it, though – sorry HUF.
Urban33 says
8:44 am on April 23rd, 2010
No way to avoid paying vat on the postage you charge, it is hard when you use royal mail as you have no vat to counter balance your payments.
Maybe look if you want for a courier to do some deliveries but it will depend of course on what you sell.
Bigpoppa says
10:24 pm on 22/04/2010
We spend a similar amount, the only way you MAY be able to reduce some of the VAT is the fact that you only have to charge VAT on shipping if the item being shipped is VATABLE.
So if you are sending non vatable goods then the postage is also non vatable, however, I think this may be changing soon.
Gerry007 says
10:29 pm on 22/04/2010
Really interesting one this!!.
We receintly had arun in with a buyer over the return postage which the law says I cannot make him pay up front without 1st telling him so. I effectively have to give him the postage up front. Ebay say this is not so (as far as their rules say) & we’ve now amended our T&C to cover this.
AMAZON do not refund return postage either.
Chris Dawson says
11:41 pm on April 22nd, 2010
Even if you tell the buyer up front that they pay return postage costs (by supplying your T’s and C’s in a timely fashion prior to the buyer requesting a return) you can’t make them return the product and you still have to refund them.
Even worse if they don’t want the hassle of returning the goods all they have to do is make them available for collection. You’re allowed to charge the exact amount (and not a penny more) that it cost you to retrieve them. For most products this is more than the cost of the item, but for some items it’s an impossible job e.g. if it’s self assembly furniture and they decide they don’t want it once it’s put together…
But hey – that’s the law and we’re just retailers who have to abide by it
Gerry007 says
1:05 am on April 23rd, 2010
Thankfully (touch wood!!) our requested return rate is somewhere between 500-1000 to 1. It’s mainly the one’s that are just up for the argument that cause the probs’.
BigPoppa says
11:57 am on April 23rd, 2010
100% agree
Sue Bailey says
11:59 am on April 23rd, 2010
Also agree – even when I sold clothes, return rate was amazingly low. IIRC I had 5 packets of beads returned from around 100,000 sold
The Shopkeeper says
9:42 am on April 25th, 2010
But Amazon do offer free delivery on everything hence if you pay you have upgraded your service and they are not required to refund this.
ebuyerfb says
10:54 pm on 22/04/2010
Is software and other media treated the same way as normal goods under the DSR? In the US it is pretty much impossible (and for good reason) to find a retailer that will accept open box software, video game, DVD, etc. The argument being that you aren’t really purchasing the physical product but a license to use it.
Are electronically transmitted goods covered under the DSR?
Steve Antony Williams says
1:03 pm on April 25th, 2010
In the UK you don’t have the “right to cancel” once the product is opened if it’s media, eg DVDs, video games. Because of piracy concerns.
Sue Bailey says
1:19 pm on April 25th, 2010
I don’t doubt that record labels and movie studios have been able to negotiate a special deal for themselves in the legislation; however, I am finding it difficult to actually find where in the legislation it says this. Could you point me to the relevent paragraph? Thanks.
Steve Antony Williams says
1:40 pm on April 25th, 2010
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073792577&type=RESOURCES
I don’t consider it to be anything to do with a “special deal”, I consider it to be common sense, if someone returns an opened media product they could have simply copied it. Hence:
However, there are some exceptions to the right to cancel. Consumers can’t cancel if the contract is for:
* accommodation, transport, catering or * leisure services
* package travel and timeshare arrangements
* food, drinks or other goods delivered regularly to the consumer’s home or workplace by a ‘regular roundsman’ such as a milkman or domestic oil supplier
* goods made to the customer’s specification
* goods that are perishable or can’t be returned, such as frozen food and fresh flowers
* audio or video recordings or computer software that the consumer has opened
newspapers or magazines
* betting, gaming and lotteries
premium-rate telephone and website services
* services that begin, by agreement, before the end of the cooling-off period
By media I’m referring to audio/video reference above. IIRC the exact wording mentions software also, but I can’t be a**** to go through the proper site to find it chapter and verse
FTR I agree on this one, retailers shouldn’t take back opened media, it could easily be abused by people never actually “buying” anything and treating Amazon/eBay/Play as a repository of piratable (is that a word ?) products and/or a giant lending library.
Sue Bailey says
1:51 pm on April 25th, 2010
Thank you. However, it is an exceptional deal for those products. Consider, for example, if I buy a screwdriver in a sealed blister pack from B&Q’s website. I can open the blister pack, use the screwdriver, send it back – not only have I had the use of the screwdriver for free, but B&Q can’t resell it as a new one in a blister pack. And they’re not a tool hire company any more than Amazon is a DVD library.
Steve Antony Williams says
2:28 pm on April 25th, 2010
True but you can’t “copy” the screwdriver
Sue Bailey says
2:42 pm on April 25th, 2010
True, but I still have the use of the bit of flat pack furniture I put together with it… and if I get another bit of furniture, I can always order another screwdriver.
Steve Antony Williams says
4:18 pm on April 25th, 2010
Watch out for Biddy’s “pirated tools” shop on eBay, lol
J T P says
5:59 pm on 24/04/2010
If I sell a large item to Australia that costs say £80 to deliver and after delivery the buyer decides they no longer want the item I will not be refunding the £80, I am not prepared to take a hit like that through no fault of my own.
Sue Bailey says
6:02 pm on April 24th, 2010
You’ll doubtless be delighted to hear that the Distance Selling Directive doesn’t apply outside the EU then.
I hope you don’t take the same attitude when you would be breaking the law. I’m sure you don’t.
Steve Antony Williams says
11:13 am on April 25th, 2010
Well devil’s advocate and all that JTP has a point Sue, it’s a bit rough on sellers to take hits of £80 like that.
Sue Bailey says
12:54 pm on April 25th, 2010
“a bit rough” has nothing to do with it. It’s not the law under the scenario that JTP outlines, so s/he either
~refunds it out of good customer service,
~doesn’t refund it out of profit-sense, or
~doesn’t ship such heavy items to Australia.
If you want to argue that you’re above the law, you’re going to ignore the law, or the law is wrong, at least argue against a law that actually exists. People spreading mis-information like this does nothing whatsoever to get retailers to do what they should and give their customers their legal rights. And for those of us who are still selling online, that damages all of our businesses.
Steve Antony Williams says
12:56 pm on April 25th, 2010
Like my blog header says “Do as all pragmatists do, compromise”, and the law should be more compromising IMO.
Sue Bailey says
1:03 pm on April 25th, 2010
Is that the law that you and JTP have made up, or the actual law that exists? And if the latter, I assume you’re actually taking action to get it changed, rather than only arguing in internet forums that you shouldn’t have to take any notice of it because you don’t like it?
The law is there – it is what it is. Merchants should know what it is, and ship accordingly. If you cannot afford to give overseas customers the rights that the law gives them, then don’t ship overseas. It’s pretty simple. Or are you so desperate for every last quid of profit that you’re happy to rip people off to get it?
Steve Antony Williams says
1:07 pm on April 25th, 2010
It’s my opinion, hence “IMO”, I couldn’t care less myself on a personal level now as I soon won’t be selling “personally” online at all.
I still don’t think it’s always right to refund postage cost to the buyer. In SNAD or damaged or faulty then yes, but on right to cancel for mainstream items which don’t really need to be “examined” (like DVDs and games) I don’t agree with it and never will. I did refund it myself on DVDs and games etc, but I only took stuff back on right to cancel if it was unopened, and in DVD THAT IS THE LAW, one small point in the DSRs in the seller’s favour. NO RIGHT TO CANCEL on opened media products.
board_surfer says
2:01 pm on 25/04/2010
“I soon won’t be selling “personally” online at all.”
oh well, when you’re rubbish at something, you’re rubbish at something.
Always best to move onto something else you can be rubbish at.
IMHO
Steve Antony Williams says
2:27 pm on April 25th, 2010
I’d hardly call my feedback and sales figures over the years etc “rubbish”, but thanks for your comments. FTR I didn’t want the responsibility of running my own company, my move is to another eCommerce role, just not my company and that’s the way I want it under my current personal circumstances.
Bigpoppa says
3:52 pm on 25/04/2010
We refund were the law says to. But I have to agree with Steve in that we shouldn’t have to.
IMO if you buy something, are aware of the delivery costs prior but later return that item then the buyer shouldn’t get their postage back (unless faulty etc).
I know what the law states, but I don’t think it will be too long before there are some changes in this area.
Sue is right in that if you’re not happy with things like this then take it up with the right people, perhaps lobby your FSB rep or MP.