Used product: can you reduce the refund?

It is one of the most tense situations in customer service: a customer exercises their right of withdrawal, but the item comes back visibly used. A common first reflex, and the first mistake: refusing the refund. The law does not allow you to. It does, however, allow you, in certain cases, to withhold part of it. Here is the exact line, set by the Consumer Rights Directive (2011/83/EU), art. 14(2).

The customer has the right to try

The starting point is non-negotiable: the consumer may handle and try the goods to establish their nature, characteristics and proper functioning, exactly as they would in a shop. Trying on a garment, switching on a device, opening a box to look at the product: all of this is allowed and justifies no refusal of a refund.

Refusing a refund on the sole ground that "the customer used it" is therefore a wrongful refusal, and one of the breaches that the national consumer regulator (in Ireland, the CCPC) penalises most readily.

What depreciation allows

The Consumer Rights Directive (2011/83/EU), art. 14(2), provides that the consumer incurs liability in the event of depreciation of the goods resulting from handling other than that necessary to establish the nature, characteristics and proper functioning of the product.

In other words: if the customer went beyond simply trying the item and did in fact depreciate it, you can withhold the amount of that depreciation from the refund. You do not refuse the refund, you reduce it to the extent of the loss of value. The nuance is anything but cosmetic: refusing is unlawful; deducting a justified depreciation is allowed.

A few examples of handling that goes beyond trying:

• a garment worn for a prolonged period, stained, washed or with its tags removed;
• an electronic device showing signs of wear, obvious hours of use or missing accessories;
• a product whose packaging, essential to resale, has been destroyed beyond what opening it required.

The condition many forget

There is a safeguard in the consumer's favour, often ignored: the customer's liability for depreciation can only be incurred if you have properly informed them of their right of withdrawal. If the information was not provided as required, the customer is not liable for the depreciation, and you must refund in full.

This is one more reason to take care with the pre-contractual information and the T&Cs: it conditions not only the deadline, but also your ability to withhold a depreciation.

A proportionate and justified deduction

Depreciation is neither a penalty nor a deterrent flat rate. The amount withheld must correspond to the actual loss of value and be capable of justification. An arbitrary or disproportionate deduction tips you from the right side to the wrong side of the law.

In practice, it is best to be able to document the state of the goods: assessment on receipt, dated photos, precise description of what goes beyond normal trying. In the event of a challenge, it is for you to demonstrate the depreciation and its extent.

The link with proof

All of this turns on facts: did the request arrive within the deadline, in what state did the goods come back, had the customer been informed? On the day of a dispute, these facts must be capable of being established. This is why a withdrawal mechanism that keeps a timestamped record of every request, coupled with your own documentation of the state of returns, puts you in a strong position. See our file on the evidential value of proof of withdrawal.

In short: you do not refuse, you deduct, and only when it is justified and you have informed the customer. For the detail of the cases where withdrawal does not apply at all, see the 13 exceptions.