Businesses must ensure that customer returns policies are appropriate

Businesses must ensure that customer returns policies are appropriate

Reselling branded, luxury goods in lower quality packaging can constitute trade mark infringement

The recent ECJ case of Christian Fülla v Toolport GmbH (Case C-52/18) (referred from German courts) highlighted the importance of businesses ensuring that their customer returns policies do not significantly inconvenience customers.

In July 2015, Mr Fülla purchased a tent from Toolport. Following delivery, Mr Fülla discovered that the tent had certain defects and he asked that Toolport rectify the problem. Toolport rejected Mr Fülla’s claim that the tent was defective but without having carried out any inspection or requiring Mr Fülla to return the tent. Mr Fülla brought proceedings against Toolport for failing to provide an appropriate remedy. During the proceedings, Toolport raised as a defence the fact that Mr Fülla had failed in his duty to return the tent to Toolport for determining whether the tent was defective.

The Sales and Guarantees Directive (1999/44/EC) (the “Directive”) was implemented in the UK by the Consumer Rights Act 2015 (the “CRA”). Both the Directive and the CRA are silent as to whether a consumer is required to return a defective product to the seller’s place of business in order to exercise his right to reject, however German law goes further and states that it is the consumer’s responsibility to return defective products to the seller. The German court therefore acknowledged that Mr Fülla was obliged to return the tent to Toolport’s place of business, however it considered the requirement for Mr Fülla to transport a defective tent to be a “significant inconvenience” and incompatible with the aims of the Directive.

Whilst the Directive does not specify whether a consumer should make defective goods available to the seller for repair or replacement, it does set out a triple requirement that any repair or replacement should be made free of charge, within a reasonable time and without significant inconvenience to the consumer. The ECJ’s judgment noted that a significant inconvenience was understood to mean a burden likely to deter the average customer from asserting their rights.

The ECJ agreed with the German Court’s decision. Whilst there was an obligation on the customer under German law to return the defective goods to the seller, in this instance it would be a significant inconvenience for Mr Fülla to return the tent to Toolport’s premises. Toolport should have either advanced the costs of a return to Mr Fülla or provided a suitable alternative to alleviate any significant inconvenience.

Returns Policy Considerations

The ECJ’s decision is particularly important because it is likely to be followed by the UK regulatory authorities and courts given that the CRA derives from the Directive. Therefore, a number of considerations can be drawn from the Fülla judgment for businesses assessing whether their returns policy is compliant and meets the Directive’s triple requirement. Issues to consider include:

  1. How much time does the seller need to inspect goods where the customer claims that they are defective and can such goods be repaired or replaced more quickly if returned?
  2. Given the nature of the goods, would requiring their return by a customer to the seller constitute a significant inconvenience which could dissuade a customer from asserting its rights? In assessing a significant inconvenience, consider:
  • The amount of return transport costs to be paid. If these are high, would it deter a customer from returning the goods?
  • The nature and value of the defective goods.

If the answers to the above are ‘yes’ then a returns policy should either offer to pay in advance for the cost of the return, or offer to collect the product, or (if practicable) allow for the seller to inspect and repair the product at the customer’s premises.

Businesses should review their returns policy to ensure that both the returns process and the customer’s rights in respect of returning defective products are appropriate in the context of the goods being sold.

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