The ins and outs of refunds and exchanges
By Melanie Chambers • Bankrate.com

It used to be that if you didn't like your Christmas gift, exchanging it for a new one or getting the cash equivalent was a breeze. That is still true for many stores and purchases, but depending on where, when and what you do with your merchandise once you get it home, you may not be able to exchange it or get your money back.

"There have been changes over the years mainly because of increasing fraud at the refund desk," says Derek Nighbor, vice-president of national affairs for the Retail Council of Canada based in Toronto.

Some customers create fake receipts or wear clothes once and then try to return them to get their money back. "Retailers are trying to strike the balance between customer-friendly return policies and protecting their business," says Nighbor.

So, we've amassed the rules -- some old and some new -- for making a hassle-free return or exchange so there's no confusion when you want to return the Pepto-Bismol-coloured turtleneck Aunt Harriet gave you for Christmas.

Tougher rules
Return and exchange policies are not legislated; therefore, policies from one store to the next can vary drastically. In the past few years, in an effort to curb fraud and clarify oddly worded conditions that have baffled customers, some stores have changed their policies.

"You're seeing some retail stores tightening up the time frame in which you might return something. It might only be couple weeks versus a month, but all retailers are different," says Nighbor.

And not all products are given the same return time. At Sears, for example, customers have 90 days to return most products but only 60 days to return mattresses and 30 days to return electronics. But that time isn't always set in stone. "If they happen to have bought (a gift) in September and they bring it back January week one and it looks brand new, 90 days is a rule, but we also understand that Christmas brings with it a few issues," says Vincent Power, director of corporate communications for Sears Canada.

Better yet, some stores offer open-ended returns. At clothing stores such as Talbots and Eddie Bauer, customers with original receipts have unlimited time to return their purchases.

Lost receipts
If you lose your receipt, most places now offer a store credit for the amount of the merchandise, provided it is still being sold in the store at the time of return. The amount is either placed on a gift card or a given as a gift certificate.

More than four years ago, Home Depot Canada began offering a full refund within 90 days, but the company also stipulates: no returns without an original receipt; instead, customers get a store credit.

But this isn't the rule for all stores. At Fairweather, a women's clothing store, even if you have your original receipt, there are no cash refunds, only exchanges. And the time to make exchanges is within seven days.

Don't expect to get a full refund every time. At Gap, if customers don't have their original receipt, "they will receive a merchandise certificate by mail for the item's current selling price," says Kimberley Terry, spokeswoman for The Gap Inc. based in San Francisco, Calif. That current selling price can be much lower than what you originally paid, so hanging on to your receipt is always a good idea.

Gift receipts
Before giving a gift, make sure you and the recipient are aware of the return and exchange conditions. Always ask for a gift receipt and include it in the gift package. This receipt doesn't reveal the price, but allows the recipient to return or exchange without hassle.

However, even with a gift receipt, not all stores will refund the item for cash. For instance, at RW&CO Clothing, only an original receipt ensures a cash refund. A gift receipt is good for a credit or exchange only.

No returns allowed
For some items and in some circumstances, customers will have no choice; the item is theirs for life. For instance, if the plastic wrapping of a CD or DVD is removed, then there is no exchange or refund. Likewise, depending on the state of some electronic equipment and the condition of its packaging, the items may also be yours for good.

Gift cards are hot sellers, but gift cards and store gift certificates are not the same as cash and can't be returned or exchanged.

And for most department and clothing stores that sell special party dresses, to receive a full refund, the tags (the full cord and ticket) have to stay on the dress. Retailers are making this a rule to prevent "wardrobing," when a customer wears the dress for one night and returns it the next day.

Lastly, many sale items can't be returned or exchanged. Sales are, after all, a retailer's way of clearing out stock for good.

Stocking up
Beware of restocking fees. If you're buying electronics, or items such as fitness equipment, that are sealed and packed tightly, you may be charged a fee. "Depending on the type of merchandise, if it doesn't come back with its original packing, then we have to send it back to the manufacturer to repack it," says Power.

At Sears, the restocking fee is 20 percent of the product's price, which includes the cost manufacturers may incur while retesting items to ensure they work properly before they resell them.

Restocking fees also apply to special order items that aren't available in the store. Home Depot charges a 15 percent restocking fee for these items, and even if you cancel the order, the fee may still apply.

Melanie Chambers is a freelance writer based in London, Ont.