How Enforceable are "Store Policies"?
Anne Wallace, Esq.

How Enforceable are “Store Policies”?

We’ve all seen those signs, generally taped somewhere near the cash register. They say things like “No Shirt, No Shoes, No Service,” or “You Break It, You Buy It,” or “No Refunds.” But how enforceable are they, really?

There is no single rule, state laws vary and the policies fall into different categories, so it may make more sense to look at them one at a time.

You Break It, You Buy It (aka the “Pottery Barn” Rule)

Willful destruction of property could, of course, lead to criminal penalties, but where the offense is accidental the situation generally favors the customer. A store owner generally has three possible theories on which to base an argument that a customer has an obligation to pay for something that has been damaged or broken. The options are statute, contract and negligence.

States generally don’t have laws on the books that require cloddish customers to make merchants whole for the things they drop, step on or knock over. That’s why stores carry insurance.

The argument is more likely to be based on a contract theory that goes something like this — the customer came into the store, saw the sign taped to the register and, by continuing to shop, implicitly agreed to its terms. In legalese, this is known as a unilateral contract.

The problem for the proprietor is in demonstrating that the customer really voluntarily consented to the terms. It would be a stretch for most courts because a policy of allowing owners to enforce whatever conditions they chose to post on their walls could have really unfortunate consequences.

That leaves negligence. A common law negligence claim would require the shopkeeper to show that the customer had a duty of care, which he or she failed to live up to and the harm that resulted was caused by that failure.

If a customer encouraged her wild child to roller skate through the aisles of the proverbial china shop, a negligence argument might work. The issue would then arise as to how much the customer should pay. Would it be retail or replacement cost? Unless the item was rare or irreplaceable, the answer is likely to be wholesale cost. A lawsuit might not be worth the potential recovery. Politely asking the customer to pay for the destruction would be cheaper.

No Refunds, No Exchanges

This is a situation in which there actually is some statutory law. No law actually requires a merchant to give refunds or permit exchanges but several states require that the customer be notified of a “no refund/no exchange” policy.

In California, retailers who have a policy of not providing a cash refund, credit or exchange when an item is returned with proof of purchase within 7 days of purchase must inform consumers about their refund policies, They must conspicuously place a written notice about their policies, in language that consumers can understand. A return policy on a receipt is not sufficient.

  • Is PTO Enough When Paid Sick Leave Is Required?

    January 19, 2016

    Look around your office. Is anyone out sick today? (Alternatively, is someone who is in the office clearly too sick to be there?) According to Bloomberg BNA, sick leave will be a big issue for …

  • How to Protect Trade Secrets

    January 26, 2016

    Coca-Cola’s recipe for its soda is supposed to be one of the best kept secrets ever. The original recipe is said to be kept in a vault in the company’s Atlanta home where visitors to …

  • Product Liability 101 for Small Importers

    September 16, 2014

    Global sourcing has lots of exciting potential. The recent entry of Alibaba.com onto the global stage along with others such as the FITA Buy/Sell Exchange, Euro Pages and Global Sources seems to presage a new …

  • 10 Tips to Prevent Business Litigation

    September 24, 2015

    An ounce of prevention, as they say, is really just sound business practice. Litigation can be ruinously expensive and may force a business into liquidation. Even a “win” can devour the time and energy you need to …

  • Diversity, Employment Discrimination and Inclusion

    September 17, 2015

    Diversity in the workplace, a totally laudable goal, is actually harder to achieve than many employers appreciate, and ill-conceived or badly executed efforts can actually make things worse, opening the door to legal liability.  To …

  • Can You Get Fired For Being Racist? [e215]

    August 17, 2015

    Nasir and Matt discuss how racism led to employees getting fired and another instance where a judge overturned a decision to terminate a racist employee. Transcript: NASIR: Okay. Welcome to our podcast where we cover business in …

  • How One Business Was Awarded Money From An Untrue Yelp Review [e226]

    September 30, 2015

    Nasir and Matt talk about a judge in New York awarding a business owner $1,000 as a result of a bad Yelp review left by a disgruntled customer.  They also discuss a recent lawsuit appeal …

  • How Businesses Can Fight Back Against Negative Social Media [e246]

    January 11, 2016

    Nasir and Matt kick off 2016 by discussing how one Indianapolis bar responded to a negative post on its Facebook page. Transcript: NASIR: Welcome to our podcast where we cover business in the news and add our …

  • When the Boss Sells the Company

    December 11, 2014

    I once worked for a company that had been rumored, maybe, at some distant time in the future, possibly, but not certainly, perhaps in connection with a potential sale or not, to be tentatively considering …

  • Employee Monitoring and Wearable Technology [e258]

    March 09, 2016

    Nasir and Matt discuss the new iPhone update that employees should pay attention to. They also talk about the pitfalls of employers issuing wearable technology to their employees. Transcript: NASIR: Welcome to our podcast where we cover business …

Similarly, in Ohio, businesses are not required to have any specific type of return policy However, if a store has a refund policy, it must be clearly and conspicuously posted. Furthermore, a refund policy may not be printed only on the receipt because the consumer sees the receipt only after the purchase has been made. If a seller does not have a refund policy posted, the consumer is entitled to a refund, if the consumer requests it.

Click Wrap, Browse Wrap and Shrink Wrap Variations

A similar issue arises with respect to terms and conditions of internet sales and services. These may go far beyond refund and exchange agreements, to include various waivers of what many people think of as ordinary consumer rights.

Who really reads the paragraphs of text before clicking on the “I Agree” box? These are “click wrap agreements.” When an internet service provider characterizes a consumer’s use of their website as an agreement to a set of terms and conditions buried somewhere on the site, these are referred to as “browse wrap agreements. A shrink wrap agreement is inside a box. The terms cannot be read until the consumer has accepted the package, paid for it and opened the box, taking off the shrink wrap. The enclosed agreement states that opening the package constitutes acceptance of the terms.

The problem with all of these variations is like the problem with unilateral contract argument in the “you break it, you buy it” situation. Is the consumer’s agreement really voluntary?

Courts often uphold click wraps but are less inclined to do so with browse wrap agreements because they do not require the user to take any affirmative steps, such as clicking on a box, in order to show agreement. Courts are also split on shrink wrap agreements because the consumer must pay for the product and open the package without actual knowledge of the terms.

No Shirt, No Shoes, No Service

This, on the other hand, is a situation that generally favors the merchant. Courts tend to grant retailers, especially eating and drinking establishments, a lot of leeway when it comes to dress code.

Laws that deal with refusal of service generally govern places of public accommodation. These include any facilities that offer lodging, food, entertainment, sales or rental services, health care, or recreation to the general public. So even though they may operate on private property, they are still subject to the service regulations set forth by federal and state laws.

Title II of the Civil Rights Act of 1964 prohibits discrimination in places of public accommodation based on a patron’s race, color, religion, or national origin, and the Americans with Disabilities Act prevents discrimination on the basis of physical, mental, or emotional impairments. Some states extend their anti-discrimination policies to protect customers from refusals of service based on other criteria, including age, gender, sexual orientation, and military status.

California, for example, has enacted very broad protections, shielding people from discrimination in all business establishments on the basis of:

  • age,
  • ancestry,
  • color,
  • disability,
  • genetic information,
  • medical condition (cancer and genetic characteristics),
  • marital status,
  • national origin,
  • race,
  • religion,
  • sex (which includes pregnancy, childbirth, medical conditions related to pregnancy or childbirth, gender, gender identity and gender expression) or
  • sexual orientation.

The California Supreme Court has held that the law is intended to cover all arbitrary and intentional discrimination by a business establishment on the bases of personal characteristics similar to those listed above.

The owner of a business establishment may generally refuse service where a customer’s presence would put the safety and welfare of the customer herself or others at risk. While state-specific health laws vary, a place of public accommodation may typically refuse to serve a customer if the customer:

  • lacks adequate personal hygiene (extreme body odor, excess dirt, etc.),
  • is visibly intoxicated,
  • is unreasonably rowdy or causing trouble,
  • the patron’s presence would overfill venue capacity,
  • does not appear to be a paying customer, or
  • has chosen not to abide by a venue’s neutral dress requirements

The last is somewhat delicate because the dress requirements must be crafted in a way that does not impinge on any of the protected statuses under state or federal law.  A requirement that patrons wear no head coverings might be problematic. A requirement that they wear shirts and shoes would likely not run afoul of anti-discrimination laws.

How effective are those store policy signs? Since most customers comply voluntarily with requests about shoes, shirts and paying for breakage, the signs may serve as a useful reminder of standards. There is no particular reason to take them down.

However, except in the case of refund and exchange notifications in states such as California and Ohio, the signs do not create any new rights or obligations for either the business owner or shopper. Those are defined by statute or common law, not signage.

Read More