Everything About Product Returns & Refunds Law in eCommerce

Introduction to Product Returns Law in Ecommerce

There is no saying to the endless possibilities of deception and fraud in a world where sugar can be sugar-free. The risk increases significantly in the faceless world of the internet. When building an ecommerce business, it is important to know the real-world laws designed to protect you and your business.

Ecommerce returns are a complex subject with endless exceptions. Therefore, many countries have decided to design specific product returns laws the ecommerce sector has to follow.

The ecommerce field has flourished in the latter half of the past decade. Most countries are still trying to adopt the ecommerce business model as the customers still struggle to trust virtual portals. Ecommerce businesses struggle to maintain a feasible returns facility.

It is challenging to design and implement laws for ecommerce businesses. A written word binding for both parties is necessary to foster the development of a business.

Ecommerce companies formulate policies typically included in terms-to-use or user agreement terms and conditions. The customer and industry are now contractually admitted to fulfill the terms and conditions stated in the guidelines.

Ecommerce companies are free to design their policies according to their customers' needs and their operations' capabilities. However, in countries like the United States, the judicial system has established laws to govern certain aspects of the sector.

Therefore, businesses have to design their policies in accordance with the law. The rules are stricter around returns, exchanges, and refunds as it is a vital part of keeping the ecommerce ecosystem viable for the customers and businesses.

Let’s take a deep dive into the product returns law ecommerce businesses should keep in mind while formulating their policies.

1) What are Product Return Laws?

According to the law, you have no compulsion to include a returns and refunds feature on your website. However, the federal law in the United States makes it compulsory to exchange or refund a damaged or defective product. The regulations regarding product returns and refunds may differ for each state, so it is essential to know about these laws.

These state laws serve to protect the consumer as well as the businesses. The ecommerce returns fraud cases are legally considered theft. It may depend on the state whether property theft is regarded as a felony or a misdemeanor. This helps ecommerce companies safeguard their products and businesses against illicit practices.

In the case of returns and refunds, each state has a different set of rules to ensure the ecommerce returns process. Most state laws have defined guidelines to ensure that the customer is educated about the returns and refunds policy.

The law requires you to disclose the returns policy ‘conspicuously’ in most states. For example, if you operate out of Minnesota, your returns policy should be published in a boldface type with a minimum font size of 14. If these standards are not met, the retailer must accept all returns and issue all refunds. Some states like Maryland require you to display the returns policy on your storefront walls, merchandise, or the receipt. 

The States also have the right to dictate the returns window. For example, Virginia and New Jersey retailers must accept returns submitted within 20 days of purchase. The return window for New York Retailers is 30 days. States like Massachusetts require you to disclose their returns, exchange, and refunds policy before approving a transaction with the customer. If a business fails to do so, the retailer must accept all returns made within a reasonable time frame.

State laws can be complex as each dictates its guidelines to ensure that the people of their state have a safe online shopping experience. Formulating your ecommerce returns policy that follows the laws set by the state judicial systems to avoid any legal complications is best.

The guidelines will guide your customers as well as your business through complicated situations. You must carefully formulate and publish your policies because you will then be contractually obligated to fulfill the terms and conditions stated in the policy document.

2) What are the different types of ecommerce policies?

For an ecommerce business, policies are like their own private constitutions. The customers, as well as the business, agree to abide by the rules and regulations outlined in the policy document for an enhanced shopping experience. Every ecommerce business should have three policies published on its website:

2.1) Privacy Policy

When your customers make a purchase with you, they have to share sensitive personal information with you for a better delivery experience. A privacy policy assures and informs the customers where their information will be stored and used.

2.2) Shipping Policy

The shipping policy dictates the terms and conditions for the delivery of an order. Since the delivery of the product is one of the main processes in the ecommerce experience, it is essential to formulate and publish a policy dictating the terms and conditions of this experience. A shipping policy can help you declare an estimated delivery time frame, liability of shipping costs, customs duties, and taxes.

2.3) Returns and Refunds Policy

Building a loyal and returning customer base is challenging for every ecommerce company. A returns and refunds policy helps you build trust with your customer. The returns and refunds policy can declare the terms and conditions for an eligible return, the liability of reverse logistics cost, the time frame of refunds, etc.

3) Importance of Returns and Refunds Policy

The ecommerce sector is a number game. High competition and low margins make it difficult for companies to flourish. In most states, it is mandatory to have a return and refund policy.  In some states, product returns laws for ecommerce in some states say that if a company or retailer does not have a return policy, it may be punished or asked to comply according to state laws.

Aside from the legal altercations, a returns policy also benefits your business. It allows you to communicate your terms and conditions to the customers. The policies also allow you to outline specific quality check restrictions and return details.

You can discuss various common issues like the liability of returns costs, modes of returns, viable reasons for returns, etc., in the returns policy to reduce pressure on the customer support team.

4) How to create a Returns and Refunds Policy?

Now that we have understood the importance of returns policy let’s take at some of the best ecommerce returns practices you need to follow. You can write a returns policy from scratch.

For this, you will have to check your operational capabilities and outline the laws' various restrictions in the states in which you conduct your business. Once this is done, you will have to ensure that all the necessary points are covered and that you do not leave any loopholes in your returns policy.

This process can be tedious and can take a lot of time. A more accessible alternative is to use a free returns policy template to generate your returns and refunds policy. You can use free templates from sources like Microsoft Word and Microsoft Excel, or you can browse the internet for some free templates. If you are looking for something specific, some paid returns policy templates available as well.

You can also use a free returns policy generator to generate a returns policy. All you have to do is find the right generator with all the required fields, add the information and click on generate. You can then add custom terms and conditions if needed and publish them on your website.

Please ensure you display your returns and refunds policy at an accessible place. To promote transparency in business, you can add the link to your policies on your check-out and login page and make it mandatory for customers to read and agree to them before they sign up and place an order.

5) Final Thoughts on Product Returns Law in Ecommerce

Humans are said to be the most intelligent animals on the planet, which means human nature is also unpredictable. Therefore, a long time ago, we established a judicial system to ensure that society does not descend into chaos. In ecommerce, the supply chain is already chaotic for an outsider.

The virtual world of the internet leaves customers and businesses exposed to various risks. Even though laws about specific ecommerce processes like returns are not present, the judicial system has learned to include certain laws that protect the interests of customers and businesses.

Ecommerce Returns Fraud is now considered a theft in the US. Whether to qualify the theft as a felony or misdemeanour may differ from state to state. Federal law in the United States does not require a returns and refunds policy, but it is mandatory to provide an exchange or a refund in case of damaged or defective items.

Every state has its own set of Product Returns Laws for ecommerce businesses. These state laws are designed to protect the consumers in their state. Most of these laws are not complex but define a certain guideline a company must abide by. It is essential to read through these laws and create a returns policy that abides by these laws.

6) FAQs

6.1) Is it legally mandatory to have a returns policy for my ecommerce business?

According to federal law in the United States, an ecommerce business does not have to have a returns and refunds policy. But, it is mandatory to provide replacements or refunds for defective products. However, some states in the United States are mandated to disclose a refund policy before completing any transactions with the customer.

6.2) What is the common Product Returns Law for ecommerce?

Most state laws require the companies to display their returns and refunds policy ‘conspicuously’ so that the companies do not slip anything in the fine print. In some states, the law already defines a return window, while other states ask you to publish the returns policy in a certain format.

The common product returns law that can be found across all states is that if the company fails to educate a customer about its returns policy, it must accept any return within the acceptable time frame.