John Lewis offers never-ending refund

The popular department store has scrapped its 28-day refund policy in favour of unlimited returns!

Times are getting tougher for British consumers.

Since the beginning of this year, we've seen the rate of VAT (Value Added Tax) rise from 17.5% to 20%, a big fall in disposable incomes, unemployment creep up, and house prices continue to weaken.

What's more, with big changes to taxes and benefits to come after the Budget, any good news for consumers should be welcomed with open arms.

Buy now, return whenever

Hence, in an effort to give consumers more confidence when shopping, the John Lewis Partnership (JLP) has scrapped its long-standing 28-day returns policy.

Instead, the iconic department-store chain -- which, as a mutual, is owned and operated by its staff, known as 'partners' -- now offers a never-ending refund policy on returned goods.

With immediate effect, customers can return unwanted purchases and gifts to John Lewis at any time. However, they must be unused, unworn and accompanied by receipts as proof of purchase.

What's more, this enhanced returns policy also applies to items bought before this year.

So, if you have, say, unwanted, unworn items of clothing bought from John Lewis gathering dust in your wardrobe, then dig them out. If you can find the receipts, and the items are in perfect condition, then you can get your money back.

I've known several unscrupulous shoppers who have worn items once or twice (such as party dresses or dress suits) and then returned them 'unused' for a refund. With no obvious signs of wear, they were able to blag full refunds, so John Lewis could face a wave of returns from dishonest consumers.

Born in the USA

In the USA, stores have been offering 'no-quibble returns' for years.

For example, there is a tale, probably an urban legend, of a person returning faulty snow tyres to upscale department store Nordstrom. The returns clerk handed over a full refund and then explained to the customer that Nordstrom didn't sell tyres!

Your legal rights

However, in the UK, your statutory rights regarding refunds are fairly limited, as laid out in the Sale of Goods Act 1979 (SOGA) and amendments. Indeed, you can return an item for a full refund only if it is not:

• as described;
• of satisfactory quality; and
• fit for purpose (including any specific purpose agreed with the seller).

If goods don't meet these three tests, then your claim is usually against the retailer and not the manufacturer. In effect, the retailer 'stands in the shoes of' the maker, unless the goods are bought using a credit agreement, when the lender also steps into these shoes (thanks to Section 75 of the Consumer Credit Act 1974).

Mail-order, telephone and online customers have additional rights, including a 14-day cooling-off period, thanks to the EU Distance Selling Directive.

However, in order to exercise your legal rights, you must reject the goods within a 'reasonable' time. Thanks to an EU Directive, this is six months for most goods, although this doesn't apply to, say, cars and the like.

For more information on SOGA, refunds and consumer rights, try this interactive SOGA flowchart from the Office of Fair Trading. Also, for future reference, print out and keep this one-page SOGA guide for customers.

You don't get something for nothing

Of course, cynics -- and critics of John Lewis -- will say that this new policy is a scam. In effect, we'll all end up paying higher prices at the till in order to subsidise JLP's generous returns policy.

However, I disagree. As a co-operative run by dedicated, professional partners, John Lewis will have done its homework carefully before deciding to implement this new policy. Thus, I suspect that JLP bosses have worked out that increased sales will more than compensate for a rise in returns.

In addition, few of us keep receipts beyond, say, four weeks, so my view is that John Lewis's profits won't be hammered by its new returns policy. At the end of the day, many shoppers are too lazy or disorganised to benefit!

As well as giving greater rights to consumers, John Lewis has introduced this policy to take another shot at its ailing high-street rivals. In the words of Andrew Murphy, JLP's Retail Director:

"We are not doing it so people can clear out their wardrobes. We are doing it to underline to people in economically difficult times that there is one shop you can buy from where you will not end up regretting it."

Will others follow suit?

At present, only Lakeland offers never-ending refunds on goods bought in its stores. However, Lakeland sells mainly low-value goods (such as kitchen utensils and appliances), so its returns policy isn't quite the equal of JLP's.

Of course, Marks & Spencer was once famed for its generous returns policy. However, in April 2009, M&S scrapped its 90-day return period, replacing it with a 35-day window to return unwanted goods. This led to accusations from once-loyal customers that M&S was going downhill.

Since 7 May 2008, members-only 'warehouse retailer' Costco has offered a 90-day refund period on most electrical goods. However, Costco membership costs £20 plus VAT a year, or £12 plus VAT for additional cards.

Nevertheless, I expect that this latest 'shot across the bows' will encourage rival retailers to follow in JLP's footsteps, so watch this space...

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