'Money back' store return policy makes aliya

Israeli consumers will be able to return almost all goods back to store within specified time period for small purchase cancellation fee.

December 13, 2010 19:15
4 minute read.
A woman shops at a department store in New York.

shopping new york 311. (photo credit: AP)

Consumers will be able to receive money back when they return many of their purchases, when a law passed by the Knesset six years ago finally goes into effect on Tuesday.

Until now, very few stores would give shoppers back their money, with consumers often having to fight just to receive store credit.

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The cash-back law has some catches. The item purchased must be valued at over NIS 50, and the return will be granted in the same way the purchase was made (cash, check or credit card). Consumers who opt to exercise their right of return will have to pay a 5-percent cancellation fee (up to a maximum of NIS 100) and must return the item within 14 days of purchase.

The regulations on returning apparel and footwear are more stringent, allowing money-back returns only within two business days, and only if the items bear the original tags and were not worn. The law does not apply to underwear or bathing suits.

The return of electronic devices will carry a 10% or NIS 100 cancellation fee (whichever is lower) if the packaging was opened.

The new law does not require refunds for food, medicine or foreign-vacation package cancellations. The law will apply to hotel reservations, mobile phone plans and gym memberships, with the retailer required to return the value of the unused portion of the service plan, minus a cancellation fee.

MK Eitan Cabel (Labor) originally sponsored the bill, which passed its third and final reading in 2004. In the ensuing six years, the Ministry of Industry, Trade and Labor was tasked with drafting the guidelines to the bill.

In February, Cabel petitioned the High Court of Justice against the ministry, complaining that it was dragging its feet in determining the criteria for which cash refunds would be permitted under the law.

Though some chains such as Fox and Super-Pharm have already allowed cash returns on products, for other chains the new law will require training and adjustments.

Upscale department store chain Factory 54, which operates six stores in Israel, released a statement on Monday describing the preparations its 360 employees were undergoing for the new policy.

Because much of the stores’ merchandise “includes luxury items costing thousands of shekels, we are acting with caution. For now we have issued guidelines for the new policy and over the course of the week we will hold briefings and simulations of situations that our stores could face,” the statement reads.

On the eve of the regulation’s rollout, the Knesset’s Economic Affairs Committee held a hearing to plan for the new rules.

“This is a consumer revolution,” committee chairman Ophir Akunis (Likud) said, adding that the regulation ushered Israel in to the front line of Western countries in terms of consumers’ rights. “The 14th of December is a holiday,” he said.

Deputy Finance Minister Orit Noked (Labor) joined in Akunis’s celebration, but warned that there may be changes made to the law’s guidelines in response to questions and problems that arise once it is put into effect.

Cabel said he planned to establish a website to gather buyers’ complaints against businesses that fail to uphold the new returns policy.

“We can enlist the Internet and Facebook to the struggle against those business owners who don’t want to work according to the new rules. I intend to make sure that business owners know that those who fail to operate under the new standards will enter a black list,” he said.

Other meeting participants, including attorney Ronit Perl of the Israel Manufacturers Association, warned that the blacklist could easily become a tool for sullying the reputations of law-abiding businesses as well as those who ignore the new rules. The Ministry of Industry, Trade and Labor has already set up a hotline at 1-800-800-132 for consumers and business owners who feel that their rights have been violated.

The new regulation comes as music to the ears of many Israelis from Anglo countries, where money-back refunds have long prevailed.

“For me [the new law] is brilliant,” said Tanya Ford, a 28-year-old Sydney native living in Tel Aviv. “Having grown up in Australia, I’m used to buying things knowing that I can get a cash refund. Here I’m often hesitant to buy things knowing I can’t return them. With this I’ll probably be more likely to buy now and think later, and I probably won’t return most things.”

Sabra Efrat Levin, shopping in Tel Aviv’s Azrieli Mall on Monday, agreed that the new law would probably increase earnings for merchants.

“It would give me more interest in making purchases because I know I’ll be able to return it afterwards and not be stuck with it or some other product from the same store,” she said.

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