Credit note vs cash refund

There is often confusion as to when a credit note should be offered by a retailer, and in turn, when the consumer should accept one. Such confusion usually stems from lack of information about retailers’ and consumers’ respective rights and obligations.

We consumers especially often do not know whether a credit note is what we are legally entitled to, or whether it is more or less than the law grants us.

When we return faulty goods that can be neither repaired nor replaced the Consumer Affairs Act gives us the right to either get a part or full refund of the price paid. These remedies also apply when the goods bought do not conform with the contract of sale. So if by law we are entitled to a refund, being offered and accepting a credit note means getting less than we are legally entitled to.

In such situations, we should keep in mind that the choice of whether or not to accept a credit note is up to us. Before deciding, consider that, unlike cash refunds, credit notes have a number of limitations.

For instance, they can only be redeemed at a particular retail outlet or chain of shops. Moreover, they usually carry specific terms and conditions which must be observed. For example, they may have to be used within a stipulated time-limit.

So before accepting a credit note, when in reality we are entitled to more, it is advisable to first check the conditions on it and make sure the trader has goods we need and want to buy. Furthermore, we should bear in mind that once we accept a credit note, even if we are legally entitled to more, we cannot change our mind later and return it for a cash refund.

If, on the other hand, there is nothing wrong with the goods and the shop willingly accepts the goods back, being offered a credit note is actually more than what we are entitled to, so we should accept it gratefully.

Fortunately, most retailers are willing to exchange or offer credit notes even when there is nothing wrong with the goods returned.

However, such a solution is usually only possible if we present the proof of purchase and meet the shop’s terms and conditions.

Whenever we are given a credit note, it is our re­sponsibility to go through its terms and conditions and check what restrictions apply. These are usually written on the credit note itself.

Special attention should be given to the expiry date and also whether there are any particular periods during the year when the credit note cannot be used, such as during ‘Sales’.

Also be careful not to lose the credit note because if this happens we do not have any legal rights and we might end up with nothing.

Ms Vella is senior information officer, Consumer and Competition Department.