By: ONYINYECHUKWU UMEH Esq.
1. Introduction
When you walk into a retail store to purchase an item or pay for a service in Nigeria, there is a reasonable possibility that you will encounter a notice stating “No Refund, No Exchange.” The notice may appear on the shop counter, at the bottom of a receipt, on an invoice or among the terms and conditions of an online business. In many instances, customers only discover the practical effect of the policy when they return to complain about a defective product, an unfulfilled order or a service that was never delivered.
For business owners, the policy is often regarded as a legitimate means of protecting commercial interests and preventing losses associated with cancellations and returned goods. For consumers, however, it can become an instrument through which businesses avoid responsibility for transactions that have gone wrong.
The difficulty with this practice is that a business policy, however clearly displayed, does not acquire the force of law merely because a customer has completed a payment. The relationship between a supplier and a consumer is governed not only by the terms agreed between them but also by statutory obligations imposed by the Federal Competition and Consumer Protection Act of 2018 (FCCPA).
The Act recognizes the right of consumers to cancel certain bookings, return goods in specified circumstances and obtain remedies where services fail to meet prescribed standards. It also restricts the use of contractual terms designed to deprive consumers of these rights. The questiontherefore is whether a business can lawfully insist on a blanket no-refund policy notwithstanding these statutory protections.
2. Consumer Rights and the Statutory Right to a Refund
The FCCPA is the primary legislation for examining the legality of no-refund policies in Nigeria. Section 1 of the Act identifies the protection of consumers’ interests and welfare as one of the fundamental objectives of the Act, while section 2 extends its application to commercial activities within, or having effect within, Nigeria.
Section 120 expressly recognizes a consumer’s right to cancel an advance booking, reservation or order for goods or services, subject to a reasonable cancellation charge. In determining whether a charge is reasonable, the Act requires consideration of the nature of the transaction, the notice given by the consumer, the supplier’s opportunity to secure another customer and the general practice of the relevant industry. A cancellation fee is, however, prohibited where the consumer cannot honour the booking because of the death or hospitalization of the person for whose benefit it was made.
The provision is very relevant to businesses that insist on retaining the entire payment whenever a customer cancels a reservation or an order. The supplier is entitled to recover a reasonable cancellation charge, but the amount retained must be justifiable in the circumstances. A blanket policy that automatically forfeits every payment, without regard to the circumstances of cancellation, is difficult to reconcile with the requirements embedded in section 120 of the Act.
Section 122 of the Act goes further to address the return of goods. It permits a consumer to return goods and obtain a full refund where goods intended for a particular purpose communicated to the supplier prove unsuitable for that purpose within a reasonable time after delivery. It also covers goods delivered without an opportunity for prior examination where the consumer rejects them within a reasonable time because they do not correspond with their description, sample or the type and quality reasonably contemplated in the agreement.
These protections are further established undersections 131 and 132 of the Act. Section 131 clearly prescribes the standards expected of goods supplied to consumers, including suitability for their ordinary purpose, good quality, proper working condition and freedom from defects. Section 132 on the other hand provides an implied warranty of quality and permits the return of goods that fail the prescribed standards within three months after delivery, without penalty and at the supplier’s risk and expense. The supplier is required to repair, replace or refund the purchase price.
The position concerning services is addressed under section 130 and it states that a consumer is entitled to timely performance and completion of services and to a standard of performance that reasonable persons are generally entitled to expect. Where the supplier fails to meet these requirements, section 130(2) permits the consumer to require the supplier to remedy the defect or refund a reasonable portion of the price paid, having regard to the extent of the failure.
These statutory provisions therefore establish that the right to a refund is not dependent solely on whether a business has chosen to offer one. In the circumstances covered by the Act, the obligation arises from law.
3. The Legality of Blanket No-Refund Policies
The primary difficulty with a blanket no-refund policy is that it attempts to treat every transaction as final, regardless of the reason for a refund request. This kind of approach disregards the distinction between a customer who simply changes their mind and one who has received defective goods or has paid for a service that the supplier failed to provide.
Section 127 of the FCCPA prohibits undertakings from imposing unfair, unreasonable or unjust contractual terms. Under subsection (2) of the Act, a contractual term may be regarded as unfair where it is excessively one-sided in favour of the supplier, inequitable or where its nature and effect were not brought to the consumer’s attention.
Section 128 further requires contractual provisions that limit a supplier’s liability or impose certain obligations on consumers to be brought conspicuously to their attention before the transaction is concluded. The consumer must also be given an adequate opportunity to understand the provision before entering into the transaction.
More importantly, section 129 prohibits contractual terms whose purpose or effect is to defeat the objectives of the Act, including provisions that deprive consumers of their statutory right to return defective goods or otherwise override rights guaranteed by the Act. Under section 129(2), a term that contravenes the provision is void to the extent of the contravention.
Consequently, displaying a no-refund notice on a shop wall or printing it on a receipt does not make the policy legally enforceable where it seeks to exclude a right guaranteed by the FCCPA. Even where a consumer has been informed of the policy before making payment, prior disclosure cannot validate a term that section 129 prohibits.
This does not mean that every no-refund arrangement is unlawful. However, where goods conform to the agreed description and satisfy the applicable quality requirements, a customer who simply changes their mind after purchase does not automatically acquire a statutory right to a refund. Equally, a supplier may impose reasonable cancellation charges in accordance with section 120. What the law prohibits is the use of commercial terms to escape obligations that the statute has imposed.
4. Judicial Position on No-Refund Policies in Nigeria
The courts have had occasion to consider the practice, particularly where service providers rely on their internal policies despite failing to fulfil their contractual obligations.
In the case of Patrick C. Chukwuma v Peace Mass Transit Limited, Suit No. E/514/2021, the Enugu State High Court considered the validity of a transport company’s no-refund policy. The claimant had purchased a transport ticket for ₦500 at the company’s Obollor-Afor branch for a journey to Enugu on 10th February 2021. Following a delay of approximately two hours, occasioned by the absence of sufficient passengers, he requested a refund so that he could make alternative travel arrangements. The company refused, relying on a statement printed on its ticket that fares paid were non-refundable.In its judgment, the Court declared the company’s no-refund policy illegal, null and void, relying on sections 104, 120 and 129 of the FCCPA. It also awarded ₦500,000 in damages against the company.
What can be seen from this case is that the company had attempted to rely on a condition printed on its ticket to retain payment despite the circumstances surrounding the failure to provide the transport service. The Court rejected that position. The decision demonstrates that a supplier’s internal policy cannot be treated as superior to the statutory rights of consumers.
A similar dispute arose in Edem Ewa Ekeng & Anor v Wakanow.com Limited, Suit No. SCC/LAG/184/2022, before a Magistrates’ Court in Lagos State. The claimants had booked flights through Wakanow and subsequently requested changes to their travel arrangements. After agreeing to the changes and receiving the required payments, the company allegedly failed to complete the necessary ticket rescheduling before the airfare increased. The claimants consequently demanded a refund so that they could make alternative arrangements. Wakanowrefused to refund the initial ticket payment, relying on its no-refund policy.
In its ruling, the Court rejected the company’s reliance on the policy and found it liable for its failure to carry out the agreed arrangements. It held that the purported no-refund provision, which had only been communicated to the claimants after payment, was illegal, null, void and not binding on them. The Court also ordered the refund of the outstanding payment and granted monetary relief for the losses arising from the company’s failure.
Both decisions clearly show the courts’ willingness to examine the substance of a transaction rather than allow suppliers to hide behind standard notices. They are, however, decisions of courts of first instance and should be understood within the facts and circumstances of the respective disputes.
5. Enforcement and the Responsibility of the FCCPC
The protection afforded by the FCCPA would have little practical value if consumers had no means of enforcing it. Therefore, section 146 of the Actprovides that a consumer may seek redress by first approaching the supplier, referring the complaint to the relevant industry regulator or filing a complaint directly with the FCCPC. The section also preserves the consumer’s right to approach a court of competent jurisdiction.
The Commission is empowered under section 148 to receive and investigate complaints concerning conduct that contravenes the Act. Sections 150 and 152 further provide for compliance notices and judicial redress.
Flowing from this, it is submitted that the FCCPC therefore has an important role in addressing the widespread use of contractual policies that undermine consumer rights. Its intervention should not be limited to resolving individual complaints. There is a need for sustained enforcement and public education, particularly among businesses that routinely impose blanket no-refund conditions without considering the statutory rights of their customers.
Businesses should also review their receipts, invoices, online terms and conditions to ensure that their refund policies comply with the Act. A properly drafted policy should distinguish between customer-initiated cancellations, defective goods, misrepresented products and services that have not been performed.
6. Conclusion
The practice of displaying “No Refund, No Exchange” notices has become commonplace in Nigerian commercial transactions. However, the frequency with which businesses adopt the policy does not determine its legality. The Federal Competition and Consumer Protection Act places clear limits on the extent to which suppliers may restrict the rights of consumers through contractual terms.
A business is entitled to protect its commercial interests and establish reasonable conditions for its transactions. What it cannot do is use those conditions to defeat obligations imposed by law. Where a supplier has failed to provide the agreed service or has supplied goods that do not meet the standards prescribed by the FCCPA, a notice declaring all payments non-refundable cannot, by itself, extinguish the consumer’s right to seek redress.
The protection of consumers does not require businesses to refund every purchase indiscriminately. It requires them to honour the obligations they have undertaken and accept the consequences where they fail to do so. Commercial policies must therefore operate within the law, not as substitutes for it.
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About the Author
Onyinyechukwu Umeh Esq. is a Legal Practitioner and can be reached via +2347014393559 or [email protected].