Sellers vs. Buyers

The only thing the new law forcing merchants to refund consumers who return a purchase without justified cause does is encourage irresponsible shopping practices.

December 15, 2010 00:04
2 minute read.
Shosh Rabinowitz

Shosh Rabinowitz. (photo credit: Courtesy)

Starting December 14, consumers in this country will be able to make a purchase, take it home and change their minds. Not because there is anything wrong with the product, not because they were misled, but out of pure convenience.

The seller is now required by law to give the buyer his/her money back.

This legislation encourages consumers not to take responsibility for their actions and promotes reckless shopping practices. Forcing a merchant to cancel a sales contract without justified cause is against the law of contracts, which respects the will of both parties in a transaction. As a rule, once a sale has taken place, after being conducted in a proper manner (i.e the buyer had all information needed to make a rational decision), both parties must honor the conditions of the sale.

The Knesset is proud to announce that this legislation makes us just like Europe or the US. But overseas, there is no legislation on this. It is a matter of consumer policy, initiated by the merchant to attract clientele. The fact that stores are proud to announce that they refund your money if you are unhappy with your purchase is good for competition.

Many stores and chains here adopted this policy long ago. Over the last years, we saw a huge improvement in refund policies, without compulsive regulation.

We should remember that the law already affords consumers much protection. For example, every store’s return/refund policy must be clearly visible, enabling the buyer to know what his/her rights are before a purchase. This regulation balances the rights of the consumer to enjoy fair trade and the rights of a merchant to act independently.

Once the law demands refunds, it becomes a different story. There are considerable costs connected to canceling a sale: The product needs to be examined thoroughly, repackaged and if that is not possible, it can be resold only as used merchandise.

As long as these costs are carried by the seller willingly, there is no problem. But once cancellations and refunds become compulsive, shop owners will surely be harmed financially. Moreover, the new regulations will affect the seller’s economic sustainability: Even after a transaction has taken, there is uncertainty as to the outcome of the sale.

The new regulation actively encourages the consumer not to take responsibility for his actions. There are some reservations however.

For example, the new regulations do not include items under NIS 50. Clothes must be returned within two days of purchase for the refund to be honored. Jewelry over NIS 3,000 is not included.

Items must be returned unused, creating a situation in which proving this will cause endless arguments between merchants and buyers.

Once merchants are required by law to refund consumers monetarily, it is important to have strict rules, which can be counter-productive. Shops which previously had a lenient return policy may now restrict it in order to abide by the law.

Keeping consumer protection in line with the Western world is a desirable feat. However, the means to this end should not be different than those enacted elsewhere.

The author is head of the legal department of the Federation of Israeli Chambers of Commerce

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