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Credit notes: when should consumers accept them?

Upon returning purchased items back to the seller, consumers are often offered a credit note if they do not choose to exchange their items there and then. Often consumers are not happy with this solution and would rather return home with a cash refund.

The conflict about whether or not to accept a credit note usually stems from lack of information about one’s rights and obligations. Hence, it is in the consumer’s best interest to be aware of how the law protects them before accepting or refusing a credit note.

The first thing that needs to be taken into consideration is the reason why the consumer is returning the item to the seller. If the reason concerns a change of mind situation or a wrong buying decision, then a consumer should be aware that sellers have no legal obligation to provide any form of remedy.

In such situations sellers are not obliged to accept back the unwanted good, let alone give consumers their money back. Fortunately for consumers, most retailers are willing to take back the goods and offer to exchange them with another item or issue a credit note. Some sellers are even willing to offer a refund.

These solutions are often offered on the condition that consumers present the original receipt and that they return the unwanted item unused. Hence, if in such a scenario consumers are offered a credit note they should accept it and be glad that they have been offered a solution when legally they had no rights.

It is important that consumers are clearly informed how the credit note can or cannot be used. It is also the consumers’ responsibility to carefully read the credit note’s terms and conditions and check what restrictions apply. These are usually written on the credit note itself. Consumers should pay special attention to the expiry date of the credit note, and also whether there are any particular periods of time during the year when the credit note cannot be used, such as during sales.

Consumers should carefully read the credit note’s terms and conditions and check what restrictions apply

Care should be taken not to lose the credit note because if it is lost, consumers risk ending empty-handed. Consumers should also keep in mind that if a seller refuses to offer a credit note for an unwanted item, unless there was a pre-sale agreement about the credit note, consumers do not have the legal right to insist that they are given a credit note.

Another situation where consumers need to return a purchased item is when the goods bought turn out to be faulty or do not conform with the contract of sale. According to the Consumer Affairs Act, the goods consumers purchase must be of satisfactory quality, as described and fit for the purpose for which goods of the same type are normally used. When these requirements are not met, consumers have a legal right to claim a remedy from the seller.

Consumers are legally entitled to claim a money refund if the ‘problematic’ goods cannot be repaired or replaced. If in such a situation consumers are offered a credit note, they should not accept it and insist on getting their money back. If consumers are tempted to accept a credit note even though they are aware that they are entitled to a refund, before doing so they should remember that a credit note is much less flexible than money, as it can only be redeemed at a particular retail outlet or chain of outlets.

Moreover, credit notes usually carry specific terms and conditions which have to be observed, such as using the credit note within a particular time frame. Hence, before accepting a credit note, consumers should carefully check what limitations the credit note has and make sure that the seller has goods which they want to buy. Furthermore, consumers should not forget that once a credit note is accepted then it may not be possible for the consumer to return it for a cash refund.

Odette Vella is director, Information, Education and Research Directorate, Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.

odette.vella@mccaa.org.mt

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