Customers to be able to return goods for cash

Retailers decry new regulations.

By RON FRIEDMAN
July 8, 2010 05:56
2 minute read.
Going east? Hamashbir on King George Avenue.

58 Department store. (photo credit: Ariel Jerozolimski)

Israeli consumers will soon be able to return many products in exchange for cash, after the Knesset’s Economic Affairs Committee on Tuesday approved new regulations that will go into effect in October.

This will create a new reality for Israeli shoppers and retailers, who until now were only required to replace or provide store credit in exchange for returned products.

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The new initiative, spearheaded by Deputy Industry, Trade and Labor Minister Orit Noked and Labor MK Eitan Cabel, cites specific circumstances under which a consumer can cancel a transaction and receive his or her money back, attempting to strike a balance between the rights of consumers and the rights of retailers.

The regulations were approved in a rushed series of meetings held by committee chairman Ofir Akunis over a period of three weeks.

Under the regulations, drawn up by the Industry, Trade and Labor Ministry, returned items must be priced at over NIS 50 and consumers will receive their refunds via the same method of payment they used to pay for the item. Shoppers who purchase products from retail chains will be able to receive a refund at any of the chain’s stores.

Full refunds will be given for all items returned within 14 days, with several exceptions and provisos for specific items. Shoes and clothing, for example may only be returned within 24 hours of the purchase and on condition that they weren’t worn.

All canceled deals will cost the buyer a 5% cancellation fee. Returning an electronic product will entail a 10% or NIS 100  cancellation fee – the lower of the two – if the original packaging was opened.

Retailers are not required to provide refunds for purchases of food, medicine or foreign vacation package cancellations.

The regulations also cover service plans, such as mobile phone contracts, hotel reservations and gym memberships. Companies will be forced to return the worth of the unused portion of the plan, but will be allowed to retain up to NIS 100 of the amount for services rendered or cancellation fees.

Retailers were highly critical of the regulations. Uriel Lynn, president of the Federation of Israeli Chambers of Commerce, characterized them as “unnecessary and harmful.”

Speaking to Army Radio, Lynn said that the regulations would cause the public to behave irresponsibly instead of educating them toward smart consumerism. Though full-refund policies are indeed common among retailers in other parts of the world, they are voluntary policies, he noted; Israel is now the only country in the world forcing retailers to adopt such policies.

While lawmakers claim that the regulations will not harm business owners as they would not actually be losing money on a canceled transaction, from the retailer’s perspective, the regulations means that no sale is final and for them that spells losses.

“Today, when someone buys an item in my store, I know I can take that money to the bank. After October I’ll have to wait for two weeks before I know that the sale is final and the money is safely mine,” said Yitzhak Davidi, a gift-shop owner from Petah Tikva.

“It’s a hassle. People will begin fighting over every product. I don’t rent out products, I sell them.”


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