As your business sells products, you may need to deal with customer product returns and refund requests. It is best practice to develop your own policies for handling refunds and returns, but the law also implies certain conditions and boundaries. If an issue with a product is caused by something on your end, you usually have to provide a remedy for that product. However, what happens when a customer damages or breaks the product themselves? This article will explain:
- handling refunds at your business;
- dealing with faulty products; and
- what happens if a customer breaks a product.
To protect your business, ensure supplier contracts meet your business’ needs. Our free Commercial Contracts Checklist will help.
Refunds at Your Business
If your business sells products or goods to customers, it is your responsibility to know when to give them a remedy if something goes wrong with them. For continuity and transparency, setting this out in a returns or refund policy can be helpful.
If you sell products to consumers for personal or domestic use, the law outlines certain situations in which you must give a customer a remedy. Under the Consumer Guarantees Act, you must offer a consumer a remedy when the product is not:
- fit for purpose;
- of acceptable quality;
- delivered on time or in good condition;
- the same as the description you gave;
- priced reasonably where there is no already agreed upon value; and
- sold legally.
If you fail to meet these consumer guarantees, you must give a customer a remedy in the form of a:
- replacement;
- repair; or
- refund.
In your refund policy, be clear with your customers about these instances and when they apply. You could face significant legal penalties if you mislead customers about their consumer rights to these guarantees.
You usually do not have to give a customer a refund or other remedy outside these situations. For example, if a customer changes their mind or orders the wrong size t-shirt, you do not have to give them a remedy. Alternatively, you may provide a remedy (such as a replacement) within a set time period following purchase.
Dealing With Faulty Products
In line with your consumer law obligations, you need to give a customer a remedy if you sell them a faulty product. Whether a product is faulty will depend on the following factors.
| How impactful is the fault? | Would the consumer have purchased the product if they knew of the fault? Does the fault impact the use and enjoyment of the product? |
| Type of products | How old is the product? Did you sell it second-hand? Second-hand products will likely have already been used, and some wear and tear will make them less durable. Some products are intended to last for an extended period of time, whereas others are more disposable in nature. |
| Price | Higher-quality goods tend to be more expensive, and consumers will expect more durability from more expensive goods. |
| Statements you make | If you make promises or guarantees about product quality, you have to back up those promises. Depending on these factors and the context of the sale, goods will be faulty if they are not of acceptable quality. This can vary, but it generally means that your products are: + fit for their intended purpose; + safe; + durable; + free from small defects; and + satisfactory in overall appearance and finish. If a customer comes to you complaining of a minor fault in your product that is easily fixable, you can choose the remedy you give, such as repairing the product. However, if the product has a major problem, such as being unsafe, the customer can choose what kind of remedy they get. In keeping with your consumer law obligations, you should be able to repair the products you sell. You can do this by having: + the necessary experience to do so yourself; or + a repair contract with the manufacturer or other trusted repairer. If you do not have repair facilities, you must let the customer know before completing the sale. |
What if a Customer Breaks a Product?
There may be situations when a customer purchases a product and possesses it for some time, then later reports a fault. Here, it is important to understand the circumstances that led to the fault. Knowing the full context will help remedy the situation and ensure you are aware of any ongoing faults with your products.
If a customer damages the product, you do not have to give them a refund or other remedy. The law does not require it in this situation. However, you must still investigate customer complaints as they arise. You cannot delay this investigation or outright refuse to deal with it. If a customer is being difficult or refusing to give you all of the information about a faulty product, you should remain polite and professional but assertive.
Further, ask the customer how they used the product and how the damage occurred. If they damaged it through misuse (such as ignoring any guidance or instructions you have provided or using the product in a way it was not intended), you do not have to give them a remedy.
Alternatively, the fault may be your responsibility if you:
- were negligent in your information about proper product use; or
- failed to provide reasonable or sufficient instructions.
You are not responsible for fixing faults due to normal wear and tear. That is the customer’s responsibility.
Key Takeaways
A product is faulty if it is unsuitable for its intended purpose or does not meet the expected quality standard. This can vary depending on the nature of the product. By law, you will need to provide an appropriate remedy if you caused the fault or were negligent. A remedy can include a replacement, repair or refund. However, if a customer breaks a product after buying it, you do not need to refund them. The law does not protect them in this instance. Although, you should provide a remedy if your negligence or misinformation caused the damage.
For more information about your consumer law obligations as a business, our experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.
We appreciate your feedback – your submission has been successfully received.
