We’re on the lead up to Christmas for another year, and with purchasing numbers on the rise again, it seems as good a time as any to reassess what your current legal documents say and to make sure you are complying with the law when serving your customers.
It is a good time to ask yourself when you last reviewed your customer terms and conditions and your refund policies to make sure that you understand them and that they comply with your legal duties.
We are answering some key questions to make sure that you are compliant this Christmas Season and beyond.
What are your legal obligations when it comes to selling products?
If we look at the consumer legislation in the UK, there are a few requirements that are essential for you to comply with when selling to the general public:
- The goods you sell should be of satisfactory quality. They shouldn’t be faulty or damaged when a customer receives them. Remember, if you are selling discounted, ‘last chance to buy’ goods, you’re not expected to deliver quite the same quality as you would for brand new, luxury goods.
- The goods you sell must be fit for purpose. This means the purpose they are supplied for. This is usually pretty straightforward, but please remember that if any of your staff tell a customer that a product will suit a particular purpose (e.g. a skin cream will reduce wrinkles), the goods must be fit for the purpose of reducing wrinkles. It is crucial that you educate your staff fully to ensure they are not stating that products are for specific purposes if that can’t be backed up.
- Products must be as you’ve described them (including any samples or models you’ve shown a customer when they made the purchase).
We would advise that you take this opportunity to ensure that your staff are fully trained in the above fundamentals and that your products comply with these requirements.
In what circumstances can a customer return your products?
Customers have a legal right to reject goods – and receive a full refund – if these don’t meet the requirements stated above. You only have to comply with this for 30 days from the date the customer purchased a product. You do not need to provide a refund after the 30-day period, but you may wish to in order to build customer trust.
Outside the 30-day period, customers have the right to have their product repaired or replaced. It is your decision as to which option you choose (usually, businesses would be expected to opt for the cheaper option). If a repair or replacement is not possible, then a full refund must be provided.
There are some exceptions to this general right to reject, namely digital downloads and perishable goods (such as food items).
In terms of digital downloads, such as an app, online games, online music, etc., your customers are not entitled to a refund. This is because they have access to the product once they have downloaded it, and so cannot properly ‘reject’ the product. This does not apply if the digital product becomes faulty, in which case you are required to repair or replace the product, or to refund a portion of the price paid.
In relation to perishable goods, customers have a shorter period of time to reject products for a full refund – the period to reject the products is the time period that is reasonable for the goods to have lasted.Dairy products, for instance, are expected to last to their use-by date.
Are your terms and conditions unfair to consumers?
Please remember that, if your terms and conditions are unfair, then you may not be able to enforce them against your customers.
Some examples of unfair terms are:
- Trying to limit the right to reject the goods
- Hiding fees in the small print
- Including very high default charges
- Including very high early termination charges (for instance, in the context of a mobile phone contract)
Are you offering any special promotions this Christmas?
If you are considering running special promotions (discounted products, prize draws, etc.) you will want to consider putting in place specific terms and conditions to deal with those promotions.
Why is that? Well, there will be particular terms and conditions that apply to those promotions, not dealt with in your general terms and conditions. If you don’t have them shown prominently to consumers, then you could expose your business to significant legal risk.
Your promotion terms and conditions, at a minimum, should cover:
- How to participate (including any costs that might be included)
- If there is a way to enter for free and how this works
- Start date and closing date
- Proof of purchase requirements, if necessary (i.e. do they need to keep their receipt?)
- The number and type of prizes
- Any limitations (including age, date or location)
- Limitations on availability of the prizes
- Your name and address
Failure to provide this information to your customers when entering into special promotions could lead to the Advertising Standards Authority sanctioning your business.
These are just some of the key legal challenges that retailers could face this Christmas – there can, of course, be other issues, depending on the nature of your business and the products you sell.
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The author of this blog post is Barbara Jamieson. Barbara Jamieson is qualified in Scotland, New York and California, and has worked at top Scottish law firms Maclay Murray and Spens LLP and Brodies LLP. Barbara also spent three years working in-house at investment management firm Martin Currie, advising on financial services and commercial contracts.