Retail Law: what you need to know as a shop owner

When you open a shop or retail business, it’s easy to think you can trade when you like, sell what you want, have your own policies and interact with customers how you please – it is your business after all.

But there are several consumer rights laws and obligations in the UK that govern certain aspects of how retailers can act.

As a shop owner or retailer, it’s up to you to be aware of these so you can act accordingly and in line with the law.

This article will run through what these are and whose responsibility it is to enforce them.

Jump to:

• Refunds and returns
• Selling items online
• Unfair terms
• Marketing your products
• Opening times
• Shop workers' rights

Refunds and returns

While most retailers have policies for returns, refunds and exchanges, many may be surprised to learn what the law states around giving refunds.

These rules differ depending on whether the customer is shopping with you in a physical store or online.

In any case, retailers are required to offer a full refund if an item is faulty, not as described or does not do what it’s supposed to.

If a product was faulty and ended up injuring someone, as a retailer, you could be liable if a claim was made against you. Product liability insurance is designed to cover you if accidents like this happen, potentially saving you from the sometimes devastatingly high costs of a claim.

Here are some reasons why you might not need to refund a customer:

• If they bought the item knowing it was faulty
• The item was damaged by the customer and then they tried to repair it either themselves or by someone else (this might not warrant a full refund, but the customer may still be entitled to a repair, replacement or partial refund)
• The customer has changed their mind about the item and no longer wants it out of choice

Considering the latter point, this means that for bricks-and-mortar retailers there are no laws against not offering a returns policy unless the item is faulty. While this is true, many shops choose to have a returns policy because it’s good customer service to offer one, especially if you’re selling items such as clothing.

It’s important when stating your refunds policy not to mislead the customer; this could include a sign saying ‘we do not accept returns or offer refunds’ as there are a few cases in which you legally have to offer a refund, as stated above.

You do not need to state a returns policy unless your policy offers the consumer more than their minimum legal entitlement. So, if you allow refunds because the customer has changed their mind, you need to state this either on a sign, on the customer’s receipt, by telling each customer at checkout or writing it clearly on your website.

If you’re creating a policy that offers more than the law requires, you can create your own conditions, but – as we’ll talk about later – these cannot be deemed unfair. These can include:

• That the item is returned unopened in its original packaging
• An original receipt or proof of purchase
• A deadline for returns, such as 30 days
• An offer to exchange or give credit if the above conditions aren’t met

If you have a returns policy that states conditions such as the above, you can’t impose them if the customer has a legal right to return, such as when the item is faulty.

To ensure you’re acting accordingly, you could state both the customers’ legal rights alongside your policy. So, an acceptable returns policy could look like this:

By law, you have the right to claim a refund, replacement, repair and/or compensation where the goods are faulty or misdescribed. In addition to this, we also allow you to return goods for a refund or exchange if you no longer want the item. All we ask is that you return the goods unused, in their original packaging, using the till receipt and within 30 days of purchase.

Some more things to be aware of as a retailer:

• You don’t have to accept a return from anyone other than the person who purchased the item
• You can request proof of purchase, such as a receipt, bank statement or packaging
• A customer has the right to request a repair or replacement on a faulty item, regardless of whether they have a warranty or guarantee, including those that have expired

Selling items online

Customers who buy your products or services online, by mail or telephone orders have a right to cancel their order for a limited time even if the goods are not faulty. If they’ve told you within 14 days of receiving their goods that they want to cancel, you have to offer a refund and issue it within 14 days of receiving the goods back. They do not have to provide a reason.

Before an order is placed

There are some things that you have to make sure the customer is aware of before they purchase online:

• A clear place that lets the customer know they have to pay when placing an order, such as a ‘pay now’ button
• Their payment, delivery and costs options
• The steps they need to take to place an order
• Allowances if customers want to correct errors in their order
• The languages that are available
• How they can read and download your terms and conditions
• Your email address
• Your VAT numbered (if registered)
• The cost of using a method of communication to complete the contract if it costs more than the basic rate
• A description of your offering, including as much information as possible
• The total price and delivery cost, including how it’s calculated
• The minimum length of their contract
• The conditions of ending a contract
• A confirmation of the contract as soon as possible (usually via email)

Additional rules apply if you’re distance selling (selling goods or services through digital TV, by mail order or by phone or text message). Read more about the rules around distance selling.

Unfair terms

Fairness can be quite subjective, but it’s important to note that as a retailer, there are things you can’t do that are deemed unfair for the consumer. Unfair terms cause a significant imbalance between the trader and consumer, either in favour of the trader or the detriment to the consumer. You can’t enforce unfair terms in your contracts, policies or notices.

In your consumer contract or policies, unfair terms could mean:

• Excessive cancellation charges and automatic loss of upfront payments
• Unbalanced rights, such as allowing yourself to cancel a consumer contract at any time, but requiring the consumer to give notice
• Increasing the agreed price at a later date

You can also not enforce terms or notices that allow you to avoid responsibility for things including death, injury, faulty goods, goods that aren’t as described, selling goods that aren’t yours to sell, delays, unsatisfactory services or not doing what was agreed.

Contracts must be written in plain language to avoid being misleading and unfair.

If you were found to have unfair terms, you could be taken to court by the Competition and Markets Authority, a local Trading Standards office or even a consumer who wants to take legal action themselves. It’s then up to the courts to decide if a term in your contract or wording in your notices is unfair.

Marketing your products

When selling your products through marketing channels, you must describe your product accurately, not make claims unless you prove them and describe the actual cost of your product.

For instance, putting out an advert that says a product costs £12.99 but does not explain that this doesn’t include VAT could be considered misleading. The same applies to subscription fees.

If you advertise on TV, radio, print, email, online or telesales, there are advertising codes of practice that you need to stick to. They require businesses to be accurate and honest, with additional rules around taste, decency and product placement. The codes of practice are governed by the Advertising Standards Authority (ASA), which can withdraw your advert, and you could be prosecuted if it was found to break the law.

Read more about the advertising codes of practice.

Opening times

There are certain rules for when retailers can and can’t trade. These differ depending on the location of your shop – for instance, there are no trading hour restrictions in Scotland – and whether your shop is large or small.

Trading hours for shops in England and Wales

A small shop is considered one that measures up to and including 280 square metres. Small shops in England and Wales can open any day or hour.

If your shop is larger than this, you cannot be excluded from the restrictions by closing part of your shop to fit the 280 square metres.

Large shops that are over 280 square metres must close on Christmas Day and Easter Sunday. They can open on Sundays but only for 6 consecutive hours between 10 am and 6 pm. If you open on Sundays but for a shorter period of time, you must clearly display what these hours are inside and outside your shop.

If you open when you’re not supposed to, you could be fined.

There are some exemptions, such as exhibition stands, pharmacies and service stations – read about the rest in gov.uk’s guide to trading hours for retailers.

Shop workers’ rights

There is no automatic right for workers to have public holidays off, including Christmas Day and Easter Sunday, or to receive extra pay if they work on these days.

This means that, legally, employees can work on these days unless you have stated in their contract that they don’t have to.

The rules are different if you’re open on a normal Sunday. Employees can’t be made to work on Sundays unless it’s agreed with their employer and in writing, such as their contract. There is also no obligation for employers to pay staff more for working on a Sunday, unless it’s been agreed.

Employees can opt out of Sunday working, unless it’s the only day they work on. They can opt out at any time, even if it’s in their contract. All the employee has to do is give you (if you’re their employer) 3 months’ notice and continue to work on Sundays during the notice period if you want them to.

Businesses that need staff to work on Sundays have to tell employees in writing that they can opt out. If you don’t do this within 2 months of the person starting work, the employee only has to give you 1 month’s notice to opt out.

If you have employees, remember you’re legally required to have employers’ liability insurance, regardless of whether they’re full-time, part-time or temporary.

Managing risk

It’s up to business owners to enforce these regulations and take responsibility if they’re not met. Where possible, you should work out which laws affect you and take actions to make sure you’re acting accordingly. This could mean setting up policies or giving training to staff.

To work out how serious the risk is to your business, you could prepare a business risk management plan.

Another way to manage risk is to make sure you’re covered for things that could happen as a result of your business, like accidents or injuries. Business insurance for shops can provide standard cover, like public liability and employers’ liability as well as provide shop-related cover such as shop front, terrorism and business interruption. If you’d like to know more, have a look at our shop insurance.