FASHION LAW
Managing product returns – what can be learned from the new ASOS returns policy?
Is it possible to manage or reduce product returns by driving consumer behaviour, through behaviour-based pricing and by imposing a penalty for exercising cancellation rights? Does this raise consumer law and data protection concerns?
B
ack in January ASOS introduced a new tool to calculate each customer’s return rate and to apply fees where the company determined that a return rate is too high (calculated over a 12-month period). Under this new framework, customers that have return rates of 70 per cent or more and have placed three or more orders will be subject to a return fee of £3.95 unless they keep more than £40 worth of their order. Further, customers that have return rates exceeding 80 per cent and have placed five or more orders will be charged a handling fee (£3.95) in addition to the return fee unless they keep more than £40 worth of their order. Customers that have a return rate of less than 70 per cent will have free returns.
Does this unlawfully penalise consumers for exercising their right to return items? The relationship between a consumer and a trader is governed by the Consumer Rights Act 2015 (CRA) and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs). The CCRs provide that consumers who have entered into contracts via distance communication (for example, online) have the right to cancel a contract with a retailer. Specifically, a consumer can cancel a contract for an online purchase at any time during the cancellation period, but this may be subject to the enhanced delivery costs, deductions for use, costs of the return and the costs of any services provided during the cancellation period. Looking specifically at the ASOS charges, ASOS is permitted to require consumers to pay for the cost of their returns, provided they have told the consumer before the contract is concluded. But what of restocking fees? The CCRs provide that, ‘the trader must not impose any fee on the consumer in respect of the reimbursement’. So while return costs are permitted to be deducted from the refund, it would appear that restocking fees are not. The only deductions that are permitted are where the value of the goods has been diminished as a result of handling by the consumer. In addition, the CRA provides that where the consumer is returning faulty goods, the trader must bear the reasonable costs of the
50 • FOOTWEAR & FASHION TODAY • APRIL 2026
return and refrain from imposing any fee on the consumer in relation to the refund (apart from a potential deduction for use). This is recognised by the new ASOS return rate tool. But interestingly, it does mention in its Fair Use Policy that where an item has been returned under this option but is not in fact faulty or incorrect, the company can apply return deductions to the refund. So, it appears that ASOS exempts faulty/incorrect items from refund deductions in general, which should mean that no handling fee will be charged.
Data protection implications A customer’s return rate, derived from their transaction history, constitutes personal data under the GDPR. It follows that the use of a return rate tool to determine whether customers are subject to a return fee involves customer profiling and amounts to a data processing activity, meaning that any retailer deploying such a tool must ensure it complies with applicable data protection requirements.
In particular, the retailer must identify an appropriate lawful basis for processing customer data in this way. The lawful basis is likely either to be that the processing is necessary for the performance of a contract (that is, to administer and enforce the returns policy) or that it is necessary for the retailer’s legitimate interests, such as reducing excessive return behaviour. Where legitimate interests are relied upon,
best practice is to carry out and document a legitimate interests assessment to ensure that the business’s interests are not overridden by the rights and freedoms of its customers. Retailers should also assess potential wider uses of return rate data and their lawfulness, including whether the data could be repurposed for marketing or shared with third parties. Transparency is always important. Introducing new uses of customer data, and the applicable lawful grounds, should be clearly explained in updated privacy notices, including how the data is used and the consequences for customers. A particular GDPR provision – Article 22 – may also apply. It restricts decisions based solely on automated processing that have legal or similarly significant effects. Businesses will need to determine if such decision-making falls within the scope of Article 22, meaning additional safeguards such as meaningful human intervention and the ability for customers to challenge decisions are required.
Stephen Sidkin is a commercial law partner at Fox Williams LLP (
www.fashionlaw.co.uk;
www.foxwilliams.com).
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
