Yes Return, Yes Exchange

By: Joanna Kaye Remolar-Limjuco

My entrepreneur-friends have asked me about customers who return to their stores, demanding for a return/refund/exchange of an item they bought.

Could they?

Article 100 of the Republic Act 7394 or the Consumer Act of the Philippines makes suppliers of consumer products “liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or decrease their value”.

Thus, when a customer buys a product, he of course expects that the product is free from any defect. He also expects that the product will be suitable for its intended design. I would say that both expectations are quite reasonable. (Like the time I excitedly bought a lamp, only to find out at home that it wouldn’t light up. Frustrated mode on.)

The continuation of Article 100 reads, “liable … for those resulting from inconsistency with the information provided on the container, packaging, labels or publicity messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts.”

So what are the remedies of the Frustrated Consumer?

If the imperfection is not corrected within thirty (30) days, the consumer may alternatively demand at his option:

a) the replacement of the product by another of the same kind, in a perfect state of use;

b) the immediate reimbursement of the amount paid, with monetary updating, without prejudice to any losses and damages;

c) a proportionate price reduction.

Clearly, the law mandates CORRECTION, REPLACEMENT, REIMBURSEMENT, OR PRICE REDUCTION, when there is a product or service imperfection.

But wait! Did I read that right? 30 days? Then why do some stores only have a 7-day policy? The law says that such term may be adjusted to at least 7 days to a maximum of 180 days. (Of course, stores would go for the leeeeaast period. Duh.)

Another thing, can the store choose to just REPAIR the product?

The law says that the Consumer can choose any of the remedies, “when by virtue of the extent of the imperfection, the replacement of the imperfect parts may jeopardize the product quality or characteristics, thus decreasing its value.”

What if the Consumer wants REPLACEMENT of the product, but it is not possible? The law says, “it may be replaced by another of a different kind, mark or model: Provided, That any difference in price may result thereof shall be supplemented or reimbursed by the party which caused the damage, xxx”

Here are other FAQ’s from DTI. (Source: https://www.dti.gov.ph/consumers/consumer-education#no-return-no-exchange)

Q: What is the legal basis of the prohibition on the “No Return, No Exchange” policy of business establishments?

A: Pursuant to the Implementing Rules and Regulations of R.A. 7394, or the Consumer Act of the Philippines, specifically Title III, Chapter 1, Rule 2, Section 7 of Department Administrative Order (DAO) No. 2, Series of 1993, the words “No Return, No Exchange”, or words to such effect shall not be written into the contract of sale, receipt of sales transaction, in any documents as evidence of sale, or anywhere in the store or business establishment.

Q: What is the rationale for this provision?

A: The prohibition is aimed to correct the misconception of a lot of consumers today that they do not have the right to return shoddy or defective goods or de mand for remedies, in case of defective or imperfect service because of the “No Return, No Exchange” notice in the receipts or anywhere in the business establishments.

Q: Why is the presence of a “No Return, No Exchange” notice considered deceptive?

A: Such statement is considered deceptive because consumers may return or exchange the goods or avail of other remedies, in case of hidden faults or defects, or any charge the buyer was not aware of the time of purchase. By provision of law, sellers are obligated to honor their implied warranties and grant corresponding remedies to consumers.

Q: Can Business establishments still issue official receipts with the “No Return, No Exchange”?

A: The Plan has six-month objectives and three-year objectives. Business establishments with unused Official Receipts should erase or blot out the words “No Return, No Exchange” before issuing such receipts and henceforth, such words should no longer be printed in their receipts or anywhere in their business establishments.

Q: If an item bought from store Y turns out to be more expensive than a similar item in store X, can the customer return the item and ask for a refund?

A: No. While consumers have the right to choose and make a canvass of prices, once a sale in done and the product has no defect, one cannot return the goods nor ask for a refund

Q: Can a store exercise only a policy of exchange but not refund?

A: Consumers are entitled to either an exchange or refund, as long as there is a defect in the quality of goods or imperfection in the service.

Q: If the defect is due to mishandling on the part of the buyer, can he/she still return the item and demand and exchange or refund?

A: No. The prohibition covers only hidden defects, shoddy goods or imperfect service.

Q: If after buying a certain item, a customer changes his/her mind and wants to return said item. Can he/she invoke the prohibition on “No Return, No Exchange”?

A: No, the prohibition is not an excuse for the consumer to return the goods because of a change of mind.

Q: Is there a time limit within which a buyer may return defective products?

A: There is no hard-and-fast rule on the period within which a customer may return the products he purchased. A rule of reason should, however, be observed, taking into consideration the nature of the item purchased and the express / implied warranties mandated by law, i.e. Consumer Act and the New Civil Code of the Philippines.

Q: Can a buyer return defective goods without the official receipt?

A: The Official Receipt is the best proof of purchase. However, he/she may still demand replacement or refund if he/she can prove that a defective item was bought from a certain store.

Q: Can a store print in their invoices the statement “Exchange of Merchandise will not be accepted without a valid receipt or other evidence of purchase”?

A: No, because there may be goods exclusively manufactured or sold by a company and there is no need to prove purchase of the item.

Q: Can a store impose the condition that merchandise can only be exchanged once?

A: No, because merchandise can be exchanged as many times, as long as the consumer chooses the option of replacement.

Conclusion:

I say that the law mainly seeks to protect the welfare of consumers by making sure that their hard-earned money of is exchanged for something of value - fit, durable, suitable, and useful. Nonetheless, every person must exercise due care when purchasing a product. This includes checking whether the thing functions, and even inquiring ahead as to the store’s return policy.

For my entrepreneur friends, it would be advisable to have your customers understand your return policy. If the products you sell are quite generic, add any tag to indicate that the products were really brought from your store. You may even add a statement in your receipt to the effect that the customer “received items in good (working) condition”, and actually making sure that the customer does! Says Jeff Bezos, Amazon's CEO: If you build a great experience, customers tell each other. Word of mouth is very powerful.

Happy buying everyone!