Implementing Practical Return Policies

Tom Clement
Thomas Clement, Vice President, Operations and General Counsel

By: Thomas Clement, Vice President, Operations and General Counsel

While purchasing various gifts over this past holiday season, I noticed that many retailers were very specific in outlining their return policies. In most instances the time frame for returns was much shorter than I have previously experienced. The most extreme example was a mere fourteen days for the return of technology. In some instances, retailers even charge a re-stocking fee. The reason behind these strict policies, of course, is shrinking profit margins due to higher costs at nearly every stage in the process.

Interestingly enough, there are no federal laws pertaining to the return of goods and only a handful of states have anything in statute. Michigan has no laws regulating returns. As a result, retailers are free to set their own policies, except for when the product is defective and a return or replacement is necessary for consumer protection purposes.

It is highly advisable to have a specific return policy that is conspicuously posted in your store and on your website. It’s also helpful if your employees mention the policy at the time of checkout. The policy should not only include the timeframe for returns but also whether the return will be in the form of an exchange, store credit or refund, whether the refund will only be in the form in which the original purchase was made, and any conditions attendant to the return such as requiring receipts or tags or some form of identification.

Returns are an unfortunate reality of any retail business and can oftentimes incur additional expense. However, happy customers are a necessity to a thriving business. The best course of action is to develop a return policy that is fair to both the business and the consumer while minimizing the negative impact on your bottom line.