Retail Restocking Fees: Customers Must Be Notified

Newark, NJCustomers who are unaware that a retail company charges restocking fees are often in for a nasty surprise when they try to return their purchases. In some cases, these restocking fees are charged regardless of whether the return is made because of an error by the company or a defect in the product.

According to research conducted by BIGresearch in 2005, 82.9 percent of consumers said they did not agree with retailers who charge restocking fees for large purchase returns. Many consumers believe restocking fees are just a way for retailers to make more money.

Retailers argue that restocking fees are necessary. For example, electronics retailers claim they cannot sell products that have been removed from their boxes as new. As such, they lose money when electronic devices are returned for no reason. However, not all electronics retailers charge restocking fees, making it seem that they are not entirely necessary.

Restocking fees are sometimes used to discourage customers from returning items. Furthermore, even where they are appropriately applied, consumers may not have been adequately warned they will have to pay this fee.

So far, companies have faced federal, state, and local lawsuits alleging that they illegally charged restocking fees. In 2002, the Federal Trade Commission (FTC) announced a proposed settlement with Dynamic Wheels and Tires, Inc., a seller of fancy automobile wheels, rims, and tires. The suit alleged that the company violated the FTC's Mail or Telephone Order Merchandise Rule because customers were charged restocking fees even when they cancelled orders because of delayed shipments or when the company decided not to ship products at all. According to the Rule, when merchants decide not to ship a properly completed mail or telephone order, the merchants must cancel the order and make a full refund. Charging restocking fees in this case is not allowed.

Retail establishments must make their restocking fee policy known to customers before purchases are made. This means that signs must be conspicuously posted in the store if a company charges restocking fees on returns. Putting a notice of restocking fees on receipts, which are not issued until after a purchase is made, does not count as notifying the consumer.

In a widely publicized lawsuit, the New Jersey attorney general filed a lawsuit against Blockbuster, Inc. in 2005 regarding the company's "No More Late Fees" policy. The lawsuit alleged that Blockbuster violated the state's Consumer Fraud Act by failing to disclose in advertisements that overdue rentals were automatically converted to a sale on the eighth day after the due date and that items returned within 30 days after the "sale" would be subject to a restocking fee.

Unfortunately, many stores do not make their restocking fee policy obvious to consumers, who only find out about the fees when they attempt to return a product.

Lawyers are investigating the possibility of a class action lawsuit against companies that unfairly charge restocking fees. If you have been charged an unreasonable restocking fee when returning merchandise, contact a lawyer to discuss your options.