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A returns policy is an essential document when you sell products online. It saves time for both you and your customers and can help you meet any relevant consumer law obligations. However, you need to ensure that you cover key issues as clearly and as transparently as possible. This article will outline four return policy essentials when selling products online.

Legal Conditions for Returns

The Consumer Guarantees Act sets out certain standards for any trader selling their goods or services to consumers in New Zealand. These guarantees will likely apply to online purchases, so your products must be:

  • fit for purpose;
  • of appropriate and reasonable qualify;
  • delivered on time and in good condition;
  • sold legally;
  • sold at a reasonable price where you did not specify a price beforehand; and
  • the same as how you have described them on your website.

If you do not meet these standards, then you must give the affected customer a remedy, which would be a:

  • repair;
  • refund; or
  • replacement.

Returns will be a part of that process. You do not necessarily need to cover your consumer obligations in your online return policy because they apply no matter what. However, it would be a good idea to include a clause detailing that you are committed to fulfilling your consumer obligations.

These rules do not apply to commercial products, which you send to businesses rather than individuals. Be sure to note this distinction in your returns policy if you sell both commercial and consumer products.

Your Policies for Returns

You do not necessarily have to allow customer returns outside of the situations listed above. However, to foster customer goodwill and better relations with consumers, it may be a good idea to include other situations where you will allow a customer to return a product and receive something else in exchange. These situations can include:

  • a customer ordering the wrong size;
  • a customer changing their mind about a purchase;
  • third-party damage; or
  • misplaced goods.

It is up to you what other conditions you allow. Whatever you decide, you should detail this in your online return policy, as well as how to start the returns process. You should include aspects covering:

  • what you require as proof of purchase;
  • what items your special returns conditions do not apply to, such as clearance or sale items;
  • how customers can complain about a purchase; and 
  • how you will investigate complaints or return requests.

What You Offer in Exchange

When you break a consumer guarantee and give a customer a remedy, if the fault is significant, the customer gets to choose what kind of remedy they want in exchange for the good. Fault levels depend on various circumstances, which include whether:

  • the product is unsafe;
  • a reasonable person would have bought the good if they knew about the fault before purchase;
  • the product is significantly different from your description; or
  • the good is substantially unfit for purpose.

On the other hand, when a fault is minor, you can choose what kind of remedy you give a customer from the three that the law provides.

For returns based on your own stores’ policies, you may be able to provide a remedy outside the core reasons. For example, if a customer wants to return a product they changed their mind about, they may get store credit instead of a full refund or replacement.

Consequently, you must detail what you offer in exchange for a customer return and what criteria determine that remedy. You have more flexibility for situations that the law does not cover, so you need to include these in your returns policy to avoid any misunderstandings.

Delivery Responsibility

If you do not sell goods to customers from a physical store, delivery becomes more crucial for your business. This fact is especially true for returns because customers may not have the ability to drop off goods to you in-store.

Therefore, you need to include a section in your returns policy detailing what the customer is responsible for when they send goods back to you for returns, such as:

  • shipping costs;
  • returning the item in its original packaging/original condition; and
  • any damage that happens during delivery.

When a customer returns a good because of a serious product fault, you need to cover the delivery cost or reimburse the customer for their loss. However, if they return a good for a lesser reason, you do not necessarily have to cover this cost. You may choose to if this is a part of your customer service brand. In any case, detailing this is essential in your returns policy.

Key Takeaways

When selling goods online to customers, you need to ensure your returns policy is an effective document that covers relevant issues for your business. Otherwise, misunderstandings and disputes can occur. If you would like more information regarding your online returns policy, LegalVision’s New Zealand e-commerce 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.

Frequently Asked Questions

Does my online business need a returns policy?

When you fail to meet your consumer guarantees, you need to provide the customer with a remedy, which may involve returning a product. It is useful to outline your terms for this process in a returns policy.

What should a returns policy include?

A returns policy should inform customers of the situations you allow product returns. It should also include other important information like who pays any delivery costs as part of the return, and any timeframes/deadlines

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