Can a company charge a restocking fee on returned merchandise?

Dear Consumer Ed: 

I bought a smartphone online.  It didn’t have the functionality I wanted, so I returned it the following week.  The company issued me a refund less a $25 restocking fee.  Can they do that?

Consumer Ed says:  

Short answer:  yes, usually.  In Georgia, retailers may set their own policies regarding refunds and exchanges, including those related to “restocking fees”.  Restocking fees have become increasingly common in today’s market, particularly when a return involves an electronics purchase because the item, once opened, can no longer be sold as new.  However, while the collection of these fees is permissible, there may be circumstances where a retailer should not enforce such a fee, or circumstances where charging it would be unfair or even deceptive.   The fees can only be charged as a cost of business, and to help offset the cost of restocking a returned item.

Generally, the customer must be notified of the store's return policies, and any restocking fees must be disclosed before the purchase is made.  In states that have laws addressing restocking fees, it’s illegal to charge them in the following situations:  in connection with the return of defective merchandise; the retailer delivered the wrong merchandise; the retailer failed to deliver the merchandise within the promised time period; the fees exceed 50% of the purchase price of the merchandise; or, the fees aren’t sufficiently disclosed prior to the customer’s purchase of the merchandise.  Some online merchants charge a percentage of the purchase price to accept a return. Certain electronics retailers charge a 15% restocking fee on items such as opened notebook computers, projectors, camcorders, digital cameras, radar detectors, GPS/navigation and in-car video systems, and a 25% restocking fee on special order products, including appliances, unless the item is defective.

The best way to protect yourself in the future is to ensure you understand the store’s policies prior to purchasing a product.  Make sure to ask questions related to the store’s refund and exchange policy.  Always thoroughly read any posted policies prior to purchasing an item and review the receipt as soon as you complete your purchase.  

If you believe the store failed to adequately disclose restocking fees, you can contest the charge by negotiating with the business. If that does not resolve things to your satisfaction, you can always consult with an attorney.  Additionally, you may submit a complaint to the Federal Trade Commission and to the Georgia Department of Law’s Consumer Protection Division by visiting or calling 404-651-8600.

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