Returns: Can you charge the customer?

“Can I charge for returns?” Well… Yes. But of course, it isn’t quite as simple as that.

What to do about returns is one of the biggest challenges facing internet retailing. Fast fashion – and ASOS in particular – have struggled to deal with the increasing tendency for consumers (particularly millennials) to buy lots of products knowing that some, if not most, will be returned.

This isn’t just an issue for fashion. Any e-commerce operation needs to consider how it will deal with returns and to look at the cost of retrieving the items and, just as importantly, processing them back into useful inventory.

At the London Ecommerce Expo a few weeks ago logistics and delivery professionals suggested retailers should simply make the customer bear the cost of returns. The immediate question from the floor was “isn’t that against the Consumer Rights Act?”

The answer is “No, it isn’t.”

As a retailer you can require a customer to pay return costs if:

  • You tell the consumer (pre-contract) they are going to have to pay for returns; and
  • You don’t imply elsewhere that it will be free

You pay if: 

  • You say, or imply, that returns are free
  • You don’t say anything pre-contract about the costs of returns

Which all means if you say ahead of time that returns must be paid for and a consumer wants to cancel the contract and get their money back, then the consumer has to pay the direct costs.

The practical guidance is if you as a retailer want to avoid postage costs, make sure standard terms and pre-sales information are up to date and clear enough on returns.

To try to reduce processing costs, retailers should also make sure that they specify an address for returns, as otherwise a consumer can validly send items to any place of business.

Savvy customers

This analysis does, of course, oversimplify.

For example, it all applies only if this is a simple “no-fault” return. It’s different if the products are faulty or not as described. Then, under the Consumer Rights Act, the purchaser can reject them and the retailer has to bear the costs of return.

The difficulty here is of course that savvy consumers will say that the product is faulty or wrong and hope that their returns costs get paid. On a simple analysis the cost of someone looking at the returned goods and arguing about whether it was wrong might outweigh the postage cost of the return. This all needs to be done quickly, as the consumer needs reimbursing within tight timescales.

So… if you want to make consumers pay the costs of sending returns back you can. But you need to make that decision with your eyes open. It will require an efficient and well-developed returns analysis process.

Free returns have the benefit of simplicity, so any policy decision to make customers pay needs to consider costs in their broader context.

Dickon Court is a managing associate at Foot Anstey

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