Legal Matters: Beneath Those Refund and Return Policies
Catalogs and Web sites provide customers with more than just product displays, merchandise descriptions and purchase information. They generally include a number of legal disclosures as well. Frequently overlooked, however, is an explanation of the retailer’s refund and return policy. Such a disclosure should be included, both as a matter of legal compliance and industry best practice.
State Disclosure Laws
Approximately one-third of states have enacted legislation related to retail sales return policies. A few states have disclosure laws specifically targeted toward certain types of direct marketers.
• In California, a vendor conducting business through the Internet or other electronic means must disclose its return and refund policy before accepting any payment from a California customer.
• In Wisconsin, “mail solicitations” generally require a seller to disclose in writing its policies “related to refunds, cancellations, exchanges or repurchases” prior to taking a customer’s credit card number or accepting payment. Significantly, however, the term “mail solicitation” is defined to exclude a catalog or an Internet homepage.
Many states have disclosure laws that apply to all retailers. Massachusetts requires return or refund policies be “clearly and conspicuously disclose[d]” prior to a sales transaction, for example. This law applies equally to shops on Beacon Hill and catalogs mailed to Boston customers.
Most state laws regarding refund/return policies, however, were drafted at a time when retail sales were assumed to occur over the counter in a conventional store. These laws typically grant retailers considerable discretion in determining their product return policies, requiring only that once the policy is established, it be clearly disclosed to consumers, usually through some form of point-of-sale posting.
For catalogers and electronic merchants who don’t maintain sales premises, but transact business remotely, the question becomes: Is there still a need to disclose return policies in order to comply with state laws, which, by their literal terms, require posting at retail establishments?