Legal Matters: Beneath Those Refund and Return Policies

… has a policy of not making refunds, cancellations, exchanges, or repurchases … ; or, if the seller or telemarketer makes a representation about a refund, cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy.

The Telemarketing Sales Rule provides, however, that telephone calls placed by customers in response to direct mail solicitations are exempt from the Rule’s requirements if, among other things, the offerer’s refund policy is clearly disclosed for customers in the initial solicitation.

The Direct Marketing Association’s Guidelines for Ethical Business Practice suggest the terms and conditions of any refund policy “should be clearly and conspicuously disclosed in the initial offer.” What’s more, the FTC recommends that consumers determine a retailer’s refund and return policies prior to ordering by phone or mail.

In addition to avoiding fines, penalties and potential class action lawsuits, clear disclosure of return policies prevents customer confusion and minimizes complaints after the completion of a sale. Disclosure can be crucial to maintaining customer goodwill and avoiding adverse interactions that could escalate into lawsuits or complaints to government agencies.

George S. Isaacson is a senior partner with Brann & Isaacson. He represents multichannel merchants on tax matters and is tax counsel to the Direct Marketing Association. You can reach him at gisaacson@brannlaw.com.