June 10, 2015
Can online retailer refuse to ship item and then charge a restocking fee?
Dear Consumer Ed:
I recently purchased a pool cover online. My credit card was charged immediately. Two weeks later, without any notification, the company refunded 95% of the purchase price. When I discovered this, they told me they kept 5% because they don’t ship to where I live. Is that legal?
Consumer Ed says:
Likely not. Generally, a company must sell goods as advertised, and have a reasonable supply of those goods available, subject to certain disclosures. At the very least, a company must disclose any limitations as to the availability of its inventory (including whether it can actually be shipped to a purchaser’s location). Even though the company selling the pool cover may not be out of stock, the fact that it cannot ship the product to you is a limitation that, had you known of it, you certainly wouldn’t have ordered or paid for the merchandise. Therefore, this means the limitation was one the company should have disclosed before you completed your transaction. When you purchase an item over the Internet, it is assumed that the seller will ship the item to you within a specified time, or, if no time is specified, within 30 to 50 days depending on the method of payment. If shipment is delayed and the seller cannot ship to you within this time—or in your case, cannot ship to you at all—the seller must give you an option to cancel your order and receive a full refund. Because you paid by credit card, you should receive your refund within one billing cycle for the full amount paid. This means 100%, not the 95% returned to you. Had you paid by cash, check or money order, you should have received the refund within 7 business days.
The company may tell you that the 5% it retained covers a restocking fee, or other shipping and handling costs, but you are likely protected. First, any such fees must be displayed clearly and conspicuously on the company’s website, and in a manner that ensures a shopper will see it before the purchase is completed. If the company didn’t sufficiently disclose these fees, it may be in violation of Georgia’s Fair Business Practices Act. The same could be said if the company knew at the time of your order that it did not ship to your location, and didn’t disclose this on its website. Even if the company could ship the item to your location, any restocking fees or shipping costs may still be unfair if there is no evidence the company actually attempted to ship the pool cover. If the seller neither placed an order with a manufacturer, nor took affirmative steps to ship the pool cover to you, then there’s no reason for any costs to be charged to you at all (i.e., if the company’s stock never left, then there’s no reason to charge you to restock it). For more information, you may want to view our previous Consumer Ed column regarding restocking fees.
If, going forward, you cannot resolve the problem directly with the company, there are several options available to you. Because you paid with a credit card, you may be able to dispute the remaining charge with your credit card company. You could also contact the Better Business Bureau to see if they can help mediate a solution between you and the company. Finally, you can file a complaint with the Federal Trade Commission, and/or with the Office of Consumer Protection by visiting www.consumer.ga.gov (or by calling 404-651-8600).