Posted on June 6, 2007 by Jerome Noll

Fees, Fees and Restocking Fees

If you have ever returned an item to a retailer, you probably know that many charge various fees on returned items. In particular, certain retailers are now charging their customers a 10% or 15% "restocking fee" when merchandise is returned in an opened box or without all of the purchase’s original packaging and accessories. Other retailers are charging a "restocking fee" even when the item is returned unopened or unused.

Consumer groups and websites devoted to airing consumer complaints have pointed out that restocking fees and the terms under which they are imposed are not adequately disclosed, and consumers who return certain items are not given the opportunity to make an informed purchasing decision. Moreover, because restocking fees are imposed uniformly as a percentage of the purchase price and without regard to the actual costs of actually "restocking" the merchandise, consumer watchdog groups believe that the practice of imposing restocking fees is deceptive and intended to create an additional source of revenue for retailers.

Retailers respond that the vast majority of fees are imposed upon items that have been returned in opened boxes. The retailers claim that once the boxes are opened the store can no longer sell the item as "brand new" and must therefore re-sell the merchandise at a deep discount. Retailers also claim that a restocking fee is needed to cover penalties imposed on the store by manufacturers.

Consumers reply that the price of doing business as a retailer has always included the possibility that customers would return certain products. Indeed, Walmart – the country’s largest retailer – does not charge restocking fees. In fact, most retailers in the U.S. don’t charge any fees at all when a customer decides to return a product.

Whether or not restocking fees are being charged for legitimate reasons, it is commonly agreed that they are costing consumers tens of millions of dollars each year. As such, many states have rules regarding how customers must be notified about the fees. For example, in New York and California customers must be made aware of restocking fees prior to making their purchase. Retailers who print their return policies on the back of their receipts -- which are then issued after a purchase is made – can be found to be deceiving consumers.

In 2005, the New York City Department of Consumer Affairs charged seven retailers a total of $4,250 for failing to properly disclose their restocking fee. The companies charged were American Design Furniture, Best Buy, Best C&N Furniture, Bombay Company, Futon Warehouse, and Sharper Image.

Also in 2005, a report issued by the Public Advocate for the City of New York found that 44 percent of stores surveyed charged restocking fees, and, of those, 27 percent did not post conspicuous signs to let consumers know about their policy.

Companies that violate consumer protection statutes, including those that are deemed to encompass retail returns and the imposition of restocking fees, may be compelled to pay consumers actual damages, punitive damages and attorneys’ fees.

If you have been unfairly or unreasonably charged a restocking fee, contact us to discuss your options.

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Posted on November 13, 2006 by Jerome Noll

Nationwide Class Action Filed Against Hollywood Tans

A recent nationwide class action initiated by Meiselman, Denlea, Packman, Carton & Eberz P.C illustrates the fact that state consumer protection statutes are powerful and flexible tools that can be utilized to protect consumers and promote pro-consumer practices. As set forth in the complaint in Hadar v. Hollywood Tanning Systems, Inc., the defendant is being sued for its failure to warn adequately its tens of thousands of indoor tanning customers about the dangers of using Hollywood Tans' services and, in particular, about the increased risks of developing skin cancer.


Since the increased risks are not adequately disclosed, as claimed in the class action suit, consumers who purchased indoor tanning services were not given the opportunity to make an informed purchasing decision, with all of the material information provided to them prior to purchase and use of the services.


In addition, as the class action asserts, Hollywood Tans, along with the indoor tanning industry, in general, has engaged in marketing an indoor tan as a "safe tan" as compared to exposure to natural sunlight. So, even if a consumer generally understood the risk of sunbathing at a beach or poolside, a reasonable customer would not think that ultraviolet exposure at an indoor tanning salon was as risky, if not riskier (given the fact that many of the machines used actually deliver many times the UV amount as does natural sunlight).


As noted in the complaint, Hollywood Tans’ website promotes the "benefits of tanning," which, in an appeal to customers’ vanity, includes, according to defendant Hollywood Tans, the contention that customers "will look terrific" and that exposure to Hollywood Tans’ ultraviolet rays will help clear acne. In addition, Hollywood Tans further claims health benefits with respect to: psoriasis; body weight; stress; and seasonal affective disorder.


Unfortunately for consumers, contrary to the indoor tanning industry's claims, and as clearly stated by respected medical authorities, including the American Medical Association, the National Cancer Institute and the American Academy of Dermatology, exposure to indoor ultraviolet rays at indoor tanning salons is not "safe," regardless of whether a consumer "tans" or "burns."


The class action does not seek damages for any personal injuries, but rather, is brought under the New Jersey Consumer Fraud Act (N.J.S.A 56: 8-1) for, among other things, restitution of the amounts paid by customers for indoor tanning services that were sold to them without proper and adequate warnings and information in violation of the New Jersey Consumer Fraud Act.


Please feel free to comment about the case and, in particular, your experiences with indoor tanning companies. In your opinion, do any of them actually warn customers and tell them that any exposure to indoor ultraviolet rays is risky?


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Posted on March 1, 2006 by Jeffrey Carton

Class Actions Against Costco in California and New York

Recent class actions in California and New York have been brought against Costco on behalf of consumers who, according to the lawsuit, had their memberships improperly back-dated. Specifically, as alleged in the complaints, filed by Meiselman, Denlea, Packman, Carton & Eberz P.C., Costco members, who purchased "renewal" membership after their older memberships expired, did not receive the expected full year of membership; rather than starting their new membership on the actual date that the member paid, Costco back-dated the membership to begin the day following expiration of the old membership.

For example, if a member chose to let his or her membership lapse upon expiration on October 1st and then subsequently decided to purchase a new "renewal" membership on December 5th, Costco, according to the class action, routinely and as a matter of practice back-dated the membership to begin on October 2nd rather than on the date the member had actually renewed (and paid for) the membership (i.e., December 5th). As a result, the class action suit contends, members are receiving less than 12 months of their "annual" membership, despite having paid a full membership fee.

This case is an example of a consumer fraud case where customers are potentially being deprived of the benefit of their bargain, and most would have never known, except for the filing of the class action law suit.

Feel free to tell the classactionblog about any similar experiences you have had as a consumer.

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