Have you ever wondered why some shops have a super-liberal return policy, while other shops don’t allow returns at all? Can a retailer just decide what they want to do, or does the government have something to say about the policies?
With the federal government seeming to regulate every possible activity, it’s surprising to note there’s no federal law on these issues, and each state is left to determine its own rules regarding gift certificates and return/refund/exchange policies. Since we’re in California, we’ll discuss California law. You should consult the laws of your own particular state if you operate outside of California.
Another surprise is that California law in both of these areas is fairly straightforward, especially concerning gift certificates.
The most important thing to know regarding gift certificates is that they cannot expire, nor be sold with expiration dates, except in certain limited circumstances. Gift certificates are allowed to have an expiration date when 1. They’re given to the customer as part of an award, loyalty or promotional program where no money or anything of monetary value was given by the consumer; 2. When the gift certificates are sold at a discount to a company who distributes them to their employees or for charitable fund-raising purposes; or 3. For a food product. A “food product” does not include a gift certificate for a restaurant meal, as this is considered mainly a service. In these limited situations, the gift certificate is permitted to have an expiration date, as long as it is printed in capital letters and appears in at least ten-point font on the front of the gift certificate.
If the gift certificate does not fall into one the three exceptions listed above, then it cannot expire. It is good until it is redeemed. It can be redeemed in cash for its cash value, or replaced with a new gift certificate at no cost to the consumer.
The law regarding return/refund/exchange policies is also fairly simple, but may present traps for the unwary when all the details are not fully understood. Retail shops can basically decide for themselves what their return/refund/exchange policy is, but the basic aim of the law is to keep consumers well informed of what exactly the shop’s policy is.
If your policy does not allow return/refund/exchanges or any combination of these with proof of purchase for at least a period of seven days following purchase of the goods, then the shop must conspicuously display this policy. “Conspicuous display” means that the policy must be displayed either at the cash register and sales counter, at all public entrances, on tags attached to the goods, or on the order forms. The information that is required in the display must include whether cash refund, store credit, or exchange will be given; the applicable time period; the types of merchandise applicable; and any other pertinent conditions.
It’s important to note that these rules do not apply to perishable goods, such as food, plants, flowers, etc., nor goods marked “as is,” “no returns accepted,” “all sales are final,” or similar language. Nor does it apply to goods used or damaged after purchase, special-order customized goods, goods not returned in their original packaging, or those that cannot be resold because of health concerns.
These rules attempt to be fair to both the retailer and the consumer, but a failure to comply by the retailer renders them liable to the consumer for the amount of the purchase if the buyer attempts to return the goods within 30 days of purchase.
More likely than not, most shops set their return/exchange policy based on their experience or what they’ve seen other shop doing, as opposed to consulting their state’s applicable laws. Basically, there is an unspoken tradition followed by most retailers.
Ken Lewis, owner of Hanger 18 skate shop in San Diego, is part of the tradition. His return/refund/exchange policies are based on his years of learning from his experriences of what others have done. He has an exchange-only policy at his shop because when he worked at other shops he saw others avoided the headaches of cash refunds by having an exchange-only policy. For gift certificates, he confirms that they are simply valid until redeemed.
So, retailers are free to decide whether or not to permit refunds, returns, or exchanges. Whatever the policy, it must be conspicuously posted unless all goods are sold “as is” or in some similar fashion. And gift certificates must not have expiration dates unless they fall into one of the exceptions listed previously. Following these simple rules ensures a cooperative relationship between both consumers and retailers.