A no refund policy is a statement explaining that a vendor or business operator will not provide compensation for purchased products or services that customers return. This policy is often found in the terms and conditions of service providers. Consumer protection laws will vary from country to country, and it becomes important for one to get familiar with existing consumer laws in a particular jurisdiction in order to have a good understanding of whether it is legally permissible to implement a no-refund policy within such a jurisdiction.
In Nigeria, there exists a Consumer Protection Law, the Federal Competition and Consumer Protection Act (FCCPA), an Act of the National Assembly which came into being in 2018 with the objectives of doing the following;
Promote and maintain competitive markets in the Nigerian economy;
Promote economic efficiency;
Protect and promote the interests and welfare of consumers by providing consumers with a wider variety of quality products at competitive prices;
Prohibit restrictive or unfair business practices which prevent, restrict or distort competition or constitute an abuse of a dominant position of market power in Nigeria; and
Contribute to the sustainable development of the Nigerian economy.
Applicability of the Federal Competition and Consumer Protection Act in Nigeria.
Section 104 of the FCCPA provides;
“Notwithstanding the provisions of any other law but subject to the provisions of the Constitution of the Federal Republic of Nigeria, in all matters relating to competition and consumer protection, the provisions of this Act shall override the provisions of any other law”.
This provision is to the effect that, subject to the provisions of the Constitution of the Federal Republic of Nigeria, 1999, as amended, from where the Federal Competition and Consumer Protection Act, 2018 derives its power and validity, the Federal Competition and Consumer Protection Act, 2018, shall be applicable in all matters relating to competition and consumer protection in Nigeria, and its provision shall override any other existing Law. To this effect, FCCPA is applicable to all commercial activities within, or to have effects within Nigeria.
For the purpose of this article, the writer seeks to highlight the rights of consumers under the FCCPA, with specific attention to the “No refund Policy vis a vis Consumer’s right to cancel advance reservation, booking or order within the Nigerian jurisdiction.
The importance of terms and conditions in any business cannot be overemphasized, as it is meant to set out the key terms you are offering to your clients and also help the parties to understand their rights and obligations. The major importance of terms and conditions is to provide clarity about what should happen in any given situation during the course of the transaction between parties.
Surprisingly, it has become a popular practice by vendors and service providers in Nigeria to insert a “No Refund Policy in their terms and conditions”. The reason for this practice is not farfetched, as it is intended to prevent refunding payments made to them by their clients/customers. However, this ugly practice has been addressed by the enactment of the FCCPA, not just to favour a particular party, but to balance the interests of both the customers and service providers.
By the provision of Section 120(1) of the FCCPA;
“A consumer shall have the right to cancel any advance booking, reservation order for any goods or services, subject to a reasonable charge for cancellation of the order or reservation by the supplier or service provider”.
The implication of this provision is that a consumer or customer shall exercise the right to cancel any advance booking, reservation order of any goods or services. The provision is very explicit, leaving no room for confusion or doubt as it does not only cover advance booking, but it goes ahead to give the consumer the right to cancel advance reservations or payment for goods yet to be delivered or for a service yet to be rendered.
The second leg of section 120 further provides that cancellations shall be subject to a reasonable charge by the supplier or service provider. This means that the service provider or supplier is permitted by law to charge the consumer a reasonable amount upon the consumer’s cancellation.
What then is an unreasonable charge?
A charge is unreasonable if it exceeds a fair amount in the circumstances. Therefore, to determine what is a reasonable or unreasonable charge, reference is made to the circumstances provided in Section 120 (2) of FCCPA, as follows;
(a) The nature of the goods or services that were reserved, booked or ordered;
(b) The length of notice of cancellation provided by the consumer;
(c) The reasonable potential for the supplier or service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice, and the time of the cancelled reservation, booking or order; and
(d) The general practice of the relevant industry.
It is important to note that when a case is before any Court, Tribunal or the Federal Competition and Consumer Commission for adjudication, it is the provision of Section 120 (2) of FCCPA, combined with the facts and circumstances of that particular case that guides in the final determination of what amounts to a reasonable charge.
A recent court judgment of reference
On the 7th day of April 2022, a High Court sitting in Enugu State, Nigeria presided over by Hon. Justice C.O. Ajah gave a judgment declaring that “NO REFUND POLICY” inserted by some companies on their business terms and conditions as illegal, null and void and particularly contrary to Sections 120, 104, 129 (1) (a) and (b) (iii) of the Federal Competition and Consumer Protection Act, 2018.
The court further ordered the Defendant to pay the sum of N500, 000 (Five Hundred Thousand Naira) as damages to the Plaintiff. The said judgment, which was delivered in Suit No: E/514/2021, was instituted by the Plaintiff, Patrick C. Chukwuma, a Lawyer, on the refusal of the Defendant, Peace Mass Transit, to refund his bus fare on their failure to convey him to his destination after two hours of waiting as a result of absence of passengers.
In the instant case, the Defendant’s“No Refund Policy” contained in its terms and condition was declared illegal because it was intended to mislead, deceive, or subject the consumer to fraudulent conduct, and aimed at overriding the effect of the FCCPA.
Procedure for Enforcement of Consumer Rights under the FCCPA
A consumer whose rights have been violated or who feels that his/her rights are likely to be violated by any service provider can either approach a Court of Law for redress as demonstrated in the above recently decided case, or approach the Federal Competition and Consumer Protection Commission via a complaint.
Where the matter is referred to the Commission, the Commission can exercise its power derived from FCCPA to investigate the complaints, constitute its tribunal and make appropriate orders which can be registered in a court as an order of Court.
CONCLUSION
It is my hope that the brief analysis above alongside the recently decided case will put service providers and sellers on notice that more Nigerians have now become aware of their many rights under the FCCPA, and will not hesitate to seek redress if any of these rights are violated.
While also acknowledging the well considered decision of the Court in the instant case on this specific subject of Consumer’s right to cancel advance reservation, booking or order, it is my hope that people would understand that it is not only this particular right that is available to them under the FCCPA, as there are many other rights available to them under the Act.
From the foregoing, it should now be known to consumers that any seller, vendor (both online vendors), service provider, etc. who insist on the “no refund of money after payment” is engaging in an unlawful and illegal sales policy.
Disclaimer
This article is merely a free educational material for enlightenment only and does not by any means create a client/lawyer relationship. Readers are advised to seek professional legal counseling for their specific situations when there is a need to. Comments, questions, criticisms, opinions and contributions are always welcomed by the writer.
The writer, Godson Ogbonna, Esq, is an Associate in the Law firm of Alabi & Sule Associates (Ace Chambers) with an interest in corporate and commercial practice. Godson can be reached via +2348136101544 or at godsonogbonnaesq@gmail.com
