Don't Let Your Terms & Conditions Put Your Store in Hot Water

May 19, 2010 · by Pamela Hazelton

If you’re like most online shoppers, you scroll right past a store’s Terms and Conditions, even if you have to check a box confirming you’ve read them.

This week, this site published an article about the Hines v. Overstock.com case, whereas a consumer is suing the etailer for imposing a $30 restock fee. The fee was outlined in the site’s Terms, which customers are advised to read. The federal judge, however, says there’s merit to the case because Overstock.com didn’t provide data that proves customers actually read the terms, and that most users wouldn’t even notice the implied agreement for placing an order.

The case may very well set a precedent in the world of ecommerce, requiring online stores to be more explicit about returns and exchanges, as well as adding one more piece of interaction in the checkout process – a checkbox or digital signature indicating acceptance.

When it comes to shopability and customer satisfaction, though, we can do better. By using bullet-list or informational graphics that summarize policies, customers can see snapshots of what fees are imposed for returning items and reporting dissatisfaction or damage. Many sites that offer a no-hassle guarantee already display this information because it entices shoppers to buy.

From a sales perspective, it makes sense that stores which impose restock fees and return ship costs wouldn’t want to make the policy obvious – it can be a turn off. On the other hand, customers hate surprises.

How can small businesses compete with the big guys and still make a profit?

• Find ways to create competitive terms. If you’re imposing high restock fees and ship costs based on profitability per order, you may be losing sales. Instead, look at sales v. returns overall. Larger, successful online stores (like Zappos.com, which provides a full year guarantee and pays shipping both ways) do experience losses on some individual orders in order to gain a competitive edge on imposed fees.

• Be clear about your terms. Use a checkbox (an enforced acceptance), or, at the least, link to them right before the submit order button.

• Include a summary on the Terms and Conditions page. Since most shoppers don’t read all the legal jumbo, tell them the key points that will affect them. Be sure to include language that makes it clear that a summary is just that.

• Be sure to point out terms that are “legal” so customers understand that they aren’t being imposed as a means to make returns cumbersome. For example, many states restrict the return of certain undergarments. Make sure you explain why certain policies are in place.

• Don’t impose return shipping fees if the damage was your fault.

• Encourage affordable shipping insurance, or group the cost into shipping charges.

You should also consider the most common reasons for returns, which is dependent upon what you sell. This can help you build a more appealing return and exchange program.

We need to learn both from the majority of online shoppers and the legal system itself. After all, the “contents are extremely hot” on coffee cups are a direct result of a lawsuit against McDonald’s. It may seem logical that customers should read your terms before purchasing, but the idea that the terms not being prominent is valid premise for a lawsuit begs to differ.

As a reminder, your store’s terms are only valid from the date they are posted, and even then, may include language that either violates laws or simply won’t hold up in court.

I’ll leave you with this key point: If you’re embarrassed by your store’s policies, or bury the link to them because they may turn off customers, it’s time to go back to the drawing board. If the legal system doesn’t sway you, then customers willing to voice displeasure via social media certainly should.

Category: Developers' Corner | Tags: Marketing, shoppers, Legal, legal