‘I don’t want a credit refund, can I have my money back?’

In the last two years, I’ve spotted a worrying rise in firms ignoring the law and offering customers credit refunds instead of cash.

Stephanie from Manchester contacted me to say that a courier company had broken an expensive clock she had ordered through the medium of chucking the parcel over her fence. After getting nowhere with the courier firm (there was no contact number), she complained to the retailer. They offered her a credit note refund of her delivery charge, but nothing towards the broken goods.

Bryan from Inverness told me that he’d been chasing a refund for a hotel that he’d booked through an online travel marketplace. The hotel had been overbooked and he couldn’t rebook a comparable one nearby. The business offered him a credit note rather than a full refund.

Over in Cheshire, Julia told me about a long-running dispute with a catalogue shop through which she’d bought a hot tub. Not only did the hot tub not work (it leaked) the wiring was also dangerously exposed. The retailer told her to deal with the manufacturer. When that didn’t work, they told her that they didn’t have to refund her, and begrudgingly offered her a £50 voucher.

Read more: ‘I’m in credit with my energy supplier — what should I do?’

Credit refunds vs cash – what the law says

In each of these cases the people who got in touch are entitled to a full refund from the retailer. The law is clear.

A business should not offer you credit or vouchers if the goods or services you have purchased are not as advertised, broken, misrepresented or can’t be provided. You are entitled to a full refund.

So why are firms trying it on? I simply don’t accept that these major retailers have ‘misunderstood’ the law. One company I saw recently tried to suggest on its T&Cs that disputes over products were between the purchaser and manufacturer. This is a blatant fallacy. They soon U-turned when the ‘error’ was spotted.

So let me explain how the law works. That way, you’ll know when you can push back should a firm try to palm you off with credit.

What are my rights if I change my mind?

If the item was bought online or on the phone then you have 14 days to return it under the Consumer Contract Regulations 2013. There are a few exceptions though, like some holidays, or items you’ve had made to order.

These rules don’t extend to items bought in store, though you have a number of rights for faulty or misrepresented items – but hold on to your receipt.

The jury is out on whether a photo of a receipt counts, so speak to the store before you go in to avoid an argument over the tills.

What if the goods are faulty?

You have lots of rights with goods or services that don’t work. However, there are certain time limits you need to bear in mind.

The Consumer Rights Act 2015 says that you have 30 days from the date the goods were purchased to return the item if it isn’t as described.

You’re entitled to a full refund within this period. Bear in mind it will go into the account of the person who bought the item. If you’re returning a gift, let the purchaser know.

What if it’s over 30 days?

If goods are faulty, you have up to six months to return the items. Here, the burden of proof is on the retailer to prove the item wasn’t damaged. It is allowed to have one crack at a repair or replacing the item, but after that, you can ask for a full refund.

Even over the six months, all is not lost, though you will need to prove why you didn’t realise the item was damaged at the time of purchase, or that the problem isn’t just down to wear and tear. Be prepared to compromise. You could be looking at a repair or a replacement. If the product has been upgraded since, you aren’t entitled to the upgraded version.

When do I get the money?

Aside from your rights buying goods online, 14 is a useful number to remember.

The retailer has 14 days to give you a refund from the point it receives the goods (or when you tell it you don’t want them, if the goods are digital). That includes delivery costs for returning damaged items, though the retailer only has to pay for the cheapest delivery option available.

What if the provider of goods or services says the item isn’t faulty?

The key thing here is whether the goods are ‘satisfactory quality’, ‘fit for purpose’ or ‘as described’. The latter option is pretty straightforward. Compare the item’s description with what you’ve got and if it’s misleading (not as described), make a complaint.

‘Fit for purpose’ is important to remember because you might not realise an item isn’t doing what it’s supposed to be doing until you’ve started using it – which might be some time after it was purchased. So if you’ve ordered blackout curtains that don’t actually black out the light, then you can argue they’re not fit for purpose.

“Satisfactory quality” is pretty subjective. To give you an example, if you go to a restaurant and say you don’t like your food after eating it all, you’re not going to get very far. But if you had asked for a vegetarian option and received a meat one, then you clearly haven’t been given what you wanted.

So a good starting point is asking ‘does it do what it says on the tin?’ If not, take the time to explain why you haven’t got what you thought you were getting.

When might a retailer offer a credit note or voucher?

There are very few occasions where a retailer could offer you a voucher or credit note instead of cash. If you’ve paid for something and it’s not what you wanted or doesn’t work you should get a refund.

Things get a bit more complicated if quite a bit of time has elapsed, like a washing machine packing in after three years. The law says that goods must last a ‘reasonable’ amount of time. I hate the use of the word reasonable in contracts – after all, what does that even mean? I’d argue a dead washing machine after three years is not reasonable. But given that you might have over used it or accidentally damaged it, compromise is the watchword here. 

Get the firm to investigate, and then ask it what solutions it proposes. Accepting a credit note as a compromise might be a good solution if there is no definitive answer as to who is at fault.

Be prepared to compromise

Another example is where you’ve paid for an annual subscription or a specific event and key parts of the contract are not honoured. Imagine you’ve booked a luxury spa weekend but the main pool is closed. You can still take the holiday, but a key component of the trip is not available.

In this case, the legal principle of “frustration of contract” is the basis of your right to seek a refund. This comes into play where goods or services cannot be delivered for reasons not anticipated when the contract was agreed. It applies to both a single event – such as a wedding venue – or ongoing contracts like a gym membership.

So let’s say you paid £300 for a year’s gym membership (£25 a month). If the gym then closed for two months, you could claim £50.00 under ‘Frustration of Contract. This also means you could pause your subscription even if you are still within a tie-in period.

Alternatively, in cases like these, you might find it easier to accept a credit note or voucher instead.