Will consumers finally be able to demand a refund?

Industry, Trade and Labor Ministry says it is drawing up regulations that will determine which products can be returned for cash.

April 8, 2010 06:25
2 minute read.


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Consumers may soon be able to demand their money back when they return an item, at least under certain circumstances, now that the Industry, Trade and Labor Ministry is pushing to issue regulations governing such returns.

The ministry on Wednesday announced that it had sent out a letter to other relevant ministries earlier this week to get their input. The issue is scheduled to be debated in the Knesset’s Economics Committee, where it is expected to face tough opposition from retailers and service providers.

As newcomers to Israel soon learn, most businesses here will not refund a customer’s money if they return a product. There is no law requiring this, except in certain cases, such as if a product was ordered by phone or Internet, or if a product was sold door-to-door.

A law that went into effect in 2006 requires stores to prominently display what their return policies are, but the store can decide that for itself: for example, if a store has properly displayed that its policy is “no returns or exchanges,” then a consumer has no recourse unless he can prove a product was defective.

Most stores will replace a product or offer store credit; only if a store does not properly display its return policy can a purchaser demand his money back.

That 2006 law, however, authorized the industry, trade and labor minister to draw up regulations that could determine when and for what products consumers could demand their money back. But the issue has dragged on over the years, mostly because of opposition by retailers.

The new initiative, spearheaded by Deputy Industry, Trade and Labor Minister Orit Noked, who is in charge of consumer issues, seeks to finally issue these specific regulations.

Two months ago Labor MK Eitan Cabel, petitioned the High Court of Justice, asking it to force the ministry to issue the regulations.

Noked’s spokesman, Uri Wollman, insisted the ministry’s move was unconnected to Cabel’s petition. He extolled Noked’s initiative as “revolutionary.”

“This is a precedent-setting move, because there is no other country in the world where cash returns are enshrined in law. In other places it is done out of a deep understanding that cash returns increase consumer trust in businesses,” said Wollman.

While he would not specify what regulations are being considered, it is known that an effort is being made to strike a balance between consumer rights and the rights of retailers. Cash returns will probably not be given on products costing less than NIS 50, perishable goods like food and medicines, or on used or refurbished products.

The regulations will most likely govern big-ticket items, like furniture and appliances, and such “impulse” items as clothing, as long as it hasn’t been worn.

The regulations will also account for services purchased by clients like mobile phone plans and gym subscriptions. In these cases the companies will have to return the customer’s money on a pro-rata basis, but will be allowed to retain up to NIS 100 as a cancellation or service fee.

The regulations will also oblige store chains to take back products bought in other branches of the chain.

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