Online retailers must refund outward postage on returned goods

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A German court has ruled that online retailers must refund outward postage when customers return goods under their right to cancel. The case involved German retailer Heinrich Heine, who argued that German law said they did not have to refund their €4.95 delivery fee to customers who returned goods. The court ruled that if German law does make such a stipulation, then it is in conflict with European law and will have to be changed.

The European Distance Selling Directive says that “the supplier shall be obliged to reimburse the sums paid by the consumer free of charge. The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods”. Under the Directive, customers have seven days from receipt of goods to withdraw from the contract and return their order.

In the UK, the Directive has been enacted as The Consumer Protection (Distance Selling) Regulations 2000, which says:

14.1 On the cancellation of a contract under regulation 10, the supplier shall reimburse any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was made free of any charge, less any charge made in accordance with paragraph (5).

This is further clarified in the OFT’s leaflet on the subject

3.48 The DSRs require you to refund any money paid by or on behalf of the consumer in relation to the contract to the person who made the payment. This means the full price of the goods, or deposit or prepayment made, including the cost of delivery. The essence of distance selling is that consumers buy from home and receive goods at home. In these circumstances, almost every case of home shopping will involve delivery of the goods ordered and so delivery forms an essential part of the contract. [emphasis theirs]

We’ll be taking a more extensive look at the rules and good practice regarding returned goods next month, so if you have questions/observations, please do leave us a comment.

45 Responses

  1. I’m surprised anyone has brought this case as the law is so clear in this area. The only doubt is whether the Act applies (private or quasi-private sales and auction-type sales).

    At Stuff U Sell, we try to keep this simple. Postage is free. You get it back if you return the goods. 🙂

    Perhaps a greater source of controversy and conflict between buyers and sellers is the Sale of Goods Act requirement to pay the return postage where the goods are defective and the seller elects for a refund on return.

    It’s not well handled in eBay’s Resolution Centre (and indeed, we have a number of concerns with the new Resolution Centre, as launched last month), but we typically offer to send a courier to collect items at our expense where we need something back for a SNAD refund.

  2. What about the restocking charge?

    This could ammount to the value of the return postage. Many online sellers include this in their terms and it does seem entirely reasonable as bricks and mortar sellers also apply this.

  3. Private sales and auctions (even those of business sellers) are not subject to the DSR’s. eBay should make this much clearer to buyers. Auctions have always legally been a buyer beware type situation no matter how eBay dress this up. Those auction sellers who do not care about feedback are not obliged to do anything!

    It would be interesting to see the outcome of any auction seller court case against Paypal or eBay in the event of a seller objecting to eBay or Paypal making a refund out of the sellers pocket.

  4. Think of the Michael Jackson concert ticket auction scenario. I wonder how many eBay sellers eBay or Paypal have taken to court to recover the refunds that eBay have made on the sellers behalf out of eBay’s or Paypal’s own coffers?

    None becuase if they did they would loose and it would set a precedent.

  5. If you offer free postage along side other postage options, and the buyer chooses an option that is not free, you do not have to refund the postage.

    You can charge a restocking fee when accepting returns outside of the required timescales (bad business to do so though IMO)

  6. It’s also worth noting that if you would not normally examine the product, lets say in a shop then the DSR’s “may” not apply.

  7. What about sales from within the UK to outside the UK?

    And sales from outside the UK by overseas sellers to the UK?

    How can European DSR rules apply to items that begin or end outside Europe?

    Again this puts the good old hard working UK seller at a big disadvantage.

    Ebay should only permit sellers who are not normally covered by the DSR’s to sell on eBay UK if they tick a box agreeing to pay return airmail postage if goods are returned within 30 days of airmail shipment.

  8. So did I read correct that if we offer free postage but someone opts for the next day paid option we don’t have to refund that?

    Stu

  9. I have a question that is along the same lines.

    Is there any way to avoid the VAT? My understanding is that I have to charge VAT on the postage element of the total cost as for mail order businesses it is considered part of the deal. I spend £60,000 a year on postage so this is a big chunk at 17.5%.

  10. We spend a similar amount, the only way you MAY be able to reduce some of the VAT is the fact that you only have to charge VAT on shipping if the item being shipped is VATABLE.

    So if you are sending non vatable goods then the postage is also non vatable, however, I think this may be changing soon.

  11. Really interesting one this!!.

    We receintly had arun in with a buyer over the return postage which the law says I cannot make him pay up front without 1st telling him so. I effectively have to give him the postage up front. Ebay say this is not so (as far as their rules say) & we’ve now amended our T&C to cover this.

    AMAZON do not refund return postage either.

  12. Is software and other media treated the same way as normal goods under the DSR? In the US it is pretty much impossible (and for good reason) to find a retailer that will accept open box software, video game, DVD, etc. The argument being that you aren’t really purchasing the physical product but a license to use it.

    Are electronically transmitted goods covered under the DSR?

  13. If I sell a large item to Australia that costs say £80 to deliver and after delivery the buyer decides they no longer want the item I will not be refunding the £80, I am not prepared to take a hit like that through no fault of my own.

  14. “I soon won’t be selling “personally” online at all.”

    oh well, when you’re rubbish at something, you’re rubbish at something.

    Always best to move onto something else you can be rubbish at.

    IMHO

  15. We refund were the law says to. But I have to agree with Steve in that we shouldn’t have to.

    IMO if you buy something, are aware of the delivery costs prior but later return that item then the buyer shouldn’t get their postage back (unless faulty etc).

    I know what the law states, but I don’t think it will be too long before there are some changes in this area.

    Sue is right in that if you’re not happy with things like this then take it up with the right people, perhaps lobby your FSB rep or MP.

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