Returning online purchases costly in Canada

Canadian shoppers don't always have the right to return items they bought online, and when they do, they usually pay so much in shipping that it can discourage them from shopping online again, a consumer advocacy group has found.

"Consumers purchasing items online do not have the benefit of inspecting the products in person, so the right of return is an important consideration," said Janet Lo, who co-authored the study released Monday by the Ottawa-based Public Interest Advocacy Centre.

Online shoppers can't try on clothing. Nor can they read the packaging on an item or get a good idea of how big it is.

PIAC commissioned polling firm Environics to survey 1,000 Canadian adults and found that 63 per cent had bought at least one item online in the previous year. Of those, 89 per cent said that when they were deciding whether to buy online, it was either very important or somewhat important that the retailer allow returns and exchanges.

Nevertheless, the group found that under Canadian law, consumers only have the right to return their purchases under "limited circumstances."

"The only case in which you have the absolute right to return is when there is a defect in the quality of the product," said Lo, legal counsel at PIAC, in an interview.

When PIAC bought and returned products from 15 well-known North American retailers (12 in Canada), it found that, typically, consumers were required to pay the cost of shipping the item back to the retailer.

For items ranging in price from $40 to $105, the shipping costs amounted to between $15 and $32. In many cases, customers had to pay for both the original and return shipping.

"The cost to return the product represents a surprising percentage of the total purchase amount and may dissuade consumers from purchasing more items online," the report warned.

Some retailers allow customers to return online purchases to a retail store, but Lo said that's not an option for all customers. There may be no retail location nearby or the customer may have mobility challenges.

In three cases, the study found that the retailer also appeared to have miscalculated the refund due to the customer after shipping costs were deducted; and two cases turned out to be a real miscalculation.

"One thing that I thought was very surprising was that in very few cases did we get a receipt that showed exactly how the refund was calculated," Lo said.

Only two retailers in the study, Dell and Old Navy, refunded the entire purchase amount and did so promptly.

However, Lo noted that was because of the specific circumstances of those purchases, and other Dell and Old Navy customers might not be so lucky. In PIAC's case, Dell didn't charge a 15 per cent restocking fee noted in its return policy and the original Old Navy order was expensive enough to qualify for free shipping.

On average, it took 15 days for the refund to arrive after the purchase was returned.

Consumers in the survey reported similar experiences.

PIAC  found that retailers were highly variable in:

• How long they would give customers to make a return following the purchase.
• The ways they used to calculate whether the purchase was eligible to be returned. It could depend on the date of purchase, invoice date, shipping date, delivery date or date the purchase was received.

EU rules offer consumer protection

The report recommended that Canadian provinces improve consumer protection for online shoppers by adopting legislation similar to the European Union's Consumer Rights Directive, which went into effect in October. It requires that:

• Online shoppers have 14 days from the moment he or she receives the goods to withdraw from a sales contract.
• Retailers who want consumers to bear the shipping costs of returning the goods must clearly inform them beforehand and give an estimate before the purchase of the maximum costs of returning something.

PIAC also provided a list of recommended "consumer-friendly" business practices for retailers. In addition to those required by the EU, it suggests:

• Allowing consumers to return purchases made online with minimal limitations on things that can't be returned. Reimbursing the least expensive original shipping and handling costs.
• Providing a clear explanation of how long it takes to receive a refund.
• Communicating with the customer by phone or email to let them know when the returned product has been received and the refund has been processed.

It also provided a list of recommendations for consumers such as:

• Checking in advance to make sure the purchase can be returned and when and how this can be done.
• Following the return instructions carefully.
• Double-checking the refund to make sure it calculated correctly.