Regret you bought it? Now you can return it

A new law allows consumers to cancel sales and get their money back, but enforcement is up to consumers themselves.

By EFRAT AHARONI/ GLOBES
December 18, 2010 21:49
Going east? Hamashbir on King George Avenue.

311 Department store. (photo credit: Ariel Jerozolimski)

After seemingly interminable discussion, and a great deal of preparation, the Money Refund Law came into force last Tuesday. The law provides for the return of a product for a cash refund (not a credit note).

Implementation of the law is not simple.

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Both consumers and traders need to become expert in the small details of when the law applies, for what products, within what amount of time and the obligations of each side, to implement the law properly.

Some retail chains, such as Ikea, Home Center and Super-Pharm, already had product return policies that go beyond the provisions of the new law. They told Globes the law would not lead them to reduce the rights they give customers.

Even someone who has done their homework may find themselves in a situation in which it is not completely clear what the law intends and whether a refund is in order.

“The law does not deal with specific cases,” said attorney Tamar Pinkus, the Industry, Trade and Labor Ministry’s director of consumer protection and fair trade. “It deals in a general way with what applies; it isn’t possible to cover all cases. If additions or exemptions are missing, we will work on them as we go along. After six months, we will review the situation, and if necessary, we will go back to the Knesset Economics Committee.”

The provisions of the law are civil rather than criminal. This means that there is no enforcement by the authorities, other than a resort by a consumer to the courts.

Consumer organizations are concerned about enforcement.

“A real consumer revolution cannot happen without an effective enforcement mechanism,” said Galit Avishai, director of consumer advocacy group Public Trust. “It is not right that the consumer’s only recourse is to the courts. The legislation should be amended to allow compensation without proof of damage, and to institute a regulatory enforcement mechanism.”

For the time being, each business will acquire a good or bad reputation in accordance with its behavior.

Here are a few questions likely to arise in the new consumer environment. More details can be obtained from the Industry, Trade and Labor Ministry’s information help line for both consumers and businesses at 1-800-800-132 and from Public Trust at (03) 560-6069 or email: moked@emun.org.

What is considered use of a product, and when may it be returned?
In many cases, it is enough to open the packaging of a product, or to remove the label affixed to it, to rule out any possibility of returning it. However, one of the main problems is in cases where opening the packaging is not in itself considered use of the product and does not prevent it from being returned, which applies to electrical goods and home and garden equipment.

Disputes will arise over what is considered use and what is not. It is enough to connect a product to the electricity supply for it to be considered used, but how is it possible to tell whether that has been done? In the electrical-goods industry it is believed that control mechanisms will be developed, such as a plastic cover on the plug that prevents connection to the power without it being broken.

“Beyond that,” said attorney Einat Bracha, deputy director of Public Trust and head of its legal department, “businesses will have to develop a system of rules to know how to cope with such cases and decide what to do.”

Is it possible to return a product that has come into contact with the body?
This means shavers, medical devices, breast pumps, etc. Under the regulations, such products can be returned, even if the packaging has been opened, as long as they have not been used. However, it is impossible to ignore the sensitivity of cases in which the utmost care over hygiene is required and the problem of selling such products to someone else.

Both the Federation of Chambers of Commerce and Public Trust believe such products should be made an exception and that their return should be forbidden if they are opened.

When is a product considered a “personal order” that cannot be canceled?
The law excepts “goods specially manufactured for the consumer according to special measurements or requirements.” However, this is a definition that is open to interpretation, and it is not always clear where the borders are to be drawn. Is a piece of furniture of an existing model ordered in a certain color, without special design or size adjustment, to be considered an exception? Is a vehicle for which you have chosen your preferred upholstery a “special order”? The Industry, Trade and Labor Ministry’s initial inclination in drafting the regulations was to minimize the exception as much as possible and limit it to cases in which the product was actually designed according to the consumer’s specifications. However, general protest by business owners, especially in the furniture trade, led Industry, Trade and Labor Minister Binyamin Ben-Eliezer to declare that the matter would be given further thought.

The ministry eventually changed its approach, and it now allows a refund only where the exact product in the shop was ordered.

This means that any change of color, type of cloth or similar change will rule out the possibility of returning the product, the assumption being that the chances of a product displayed in the shop being sold again are high, whereas any personal choice by one consumer will not necessarily suit others.

“Even so, an order from a catalogue, which requires choices to be made as part of the order, will not be considered a personal order,” Bracha said. “The question is whether there is an existing basis with special additions, or whether the consumer always has to make choices as part of the buying process.”

What is considered original wrapping?
Original packaging, enabling a product to be returned as long as it is unopened, is that which serves the manufacturer or importer as wrapping for the product but is not an inseparable part of it. For example, the bottle containing perfume is not original packaging, but the sealed cellophane surrounding the bottle is, and as long as that has not been opened, the perfume can be returned. A shampoo bottle is not considered original packaging, nor is packaging by the seller that is not original, such as a package of products put together in the shop.

Can a product be returned to a private franchisee?
Under the regulations, a product can be returned to any branch of the chain from which was bought, except for a private franchisee, meaning someone entitled to use the chain’s name but who maintains a separate accounting system. However, this is on condition that a sign is prominently displayed in the shop making it clear to the consumer that the shop is a franchise and that products bought in other shops in the chain cannot be returned there. If there is no such sign, the owner of the business must allow return of the product if all the other conditions for doing so are fulfilled.

What about credit costs?
Businesses are entitled to charge clearing costs for credit cards, which are usually tiny sums, if they can prove their existence.

What about VAT?
For a product bought free of VAT in Eilat, the refund will be the price net of VAT in any other branch of the chain, and vice versa; i.e., if you have bought a product and paid VAT, you can return the product in Eilat and obtain a refund of the full price. The rule is that you receive what you paid, even if that requires the business to adapt its accounting system.

What does the law cover?
• Clothing and footwear
• Electrical goods
• Telephones
• Communications services
• Furniture
• Equipment for home and garden
• Water dispensers
• Watches
• Jewelry up to NIS 3,000
• A new car from the importer
• Courses and pastimes
• Domestic tourism
• Subscriptions to fitness and introduction clubs
• Long-term vacations transactions
• Cosmetic services
• Any product in its original wrapping.

What is not covered?
• Food
• Drugs and nutrition supplements
• Underwear and bathing suits
• Furniture assembled at home
• Jewelry over NIS 3,000
• Gas canisters • Information
• Products that can be recorded or duplicated (such as CDs) if they are not in their original wrapping
• Products made to personal order
• Perishable products (newspapers, milk, etc.).

Within how much time must the return be made?
Mostly within two weeks of receipt of the goods or of ordering of the service. For some items the period is shorter; for example, two working days for clothes, footwear and jewelry up to NIS 3,000. For tourism and education services, cancellation can be made up to a week before the service is due to be provided.

What are the conditions for returning goods?
• No use must have been made of the goods
• The goods must be undamaged
• Proof of purchase.

Some products can be returned even if the original wrapping has been opened, as long as they are undamaged.

How is the refund made?
According to the payment method: Cash is returned in cash; for credit-card payments, the payment is canceled or refunded on the credit- card account; for payment by check, the refund is in cash within five days of the check being presented.

What is the cancellation fee?
The lower of 5 percent of the purchase price or NIS 100.


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