Tis the season for retailers to turn to the expensive and painful process of holiday gift returns. Some analysts estimate up to 30% of gifts are returned or exchanged. This process is made all the more cumbersome when the gift was purchased online. Returns of the latest electronic gizmos may mean they can only be resold as used or refurbished if they have been opened and test driven before being rejected. Amazon.com's newest revolutionary advancement may cure the ills of returns and restocking for retailers and quite possibly end gift-giving as we know it. Its "converting gift" patent (covered here, here and here) will allow recipients of gifts from Amazon.com to pre-screen their gifts before receipt and opt to do a variety of things in lieu of actually receiving the gift. According to the patent, users can decide whether the gift should be converted into a gift certificate, whether the gift should be converted to another gift, whether the gift should be converted to the same gift but in a different size or format, and whether the gift should be converted to a gift for someone else. Users can create rules to specify the extent of information they will receive regarding the gift (i.e., details as to the category of gift item), whether the gift should be automatically converted, or just whether the user should be notified of the gift. Basically, it sounds like, if this patent is fully implemented, little Johnny will be able to assure that any clothing item can be converted to a video game and that he will only receive a videogame on the list that he promulgates ahead of time. The question raised by the Washington Post and other commentators, is what about the poor gift giver? For example, there is the aunt who spends countless hours picking out the perfect gift for her nephew only to walk away unaware that the he "unwraps" the gift online days before his birthday or Christmas, and order himself something else behind her back. Although this patent has been the topic of a debate regarding the etiquette of gift-giving, as retailers develop new policies, it is a good time to review the legal basics about disclosure of return policies generally. It is well established that retailers should clearly and conspicuously disclosure their return policies. The FTC has detailed guidance regarding how to make disclosures online to avoid unfair or deceptive acts or practices in the Internet sphere. Online retailers should place disclosures, including those regarding the return policy, in a prominent location on their websites and make them noticeable prior to the purchase page, such as on the home page. A disclosure may need to be repeated several times in order to avoid deceptive messaging. What is required for each retailer differs depending on the website, but the FTC has made clear that the message must be accessible and clearly conveyed to consumers. In addition, various states have specific laws regarding return policies. For example, in New York, retailers must post the policy clearly in every establishment and state under what conditions a refund will be given. In California, there is a presumption that a retailer will accept an item for a refund, credit or exchange within 7 days of purchase, and any policy that differs from this must be disclosed at the time of purchase. The bottom line is that any policy, old or new, should be clear to consumers and avoid the appearance of being deceptive or misleading. While Miss Manners might have serious reservations about the propriety of pre-returns, from a legal perspective, the key is simply clear and conspicuous disclosure, including letting the gift giver know that the selected present might be returned sight unseen. – Deborah Birnbaum and Amy Mudge
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