Extracted from Law360
This holiday season, retailers could find themselves facing significant legal exposure to class actions involving changed return policies and management of in-store crowds in response to the COVID-19 pandemic.
For instance, retailers could face claims stemming from allegedly inconsistent return policies or from a purported refusal to honor a policy that was in place at the time of purchase but is currently suspended.[1]
Similarly, retailers could face claims over maintaining and enforcing social distancing and other COVID-19 safety protocols.
Given this, retailers face the difficult question of how to best adjust their return and in-store policies to promote the safety of their customers, employees and communities, without taking on additional legal risk.
One way to limit their exposure is to consider what types of claims will be brought. The most likely claim is for breach of contract for failure to honor a return policy.
If a company has changed its return policy since the purchase, either as a result of the COVID-19 crisis or for some other reason, a consumer may seek to enforce the old policy, claiming it to be a material term of the purchase.
The claim could have multiple goals: to force acceptance of the return or, if the return is denied, to recoup a portion of the purchase price that the consumer attributes to the value of the return option.
Another likely claim is for violations of state consumer protection statutes. A number of states require retailers to prominently display their return policies if the policies do not provide for a full refund within a certain number of days.
For example, in California a retailer's failure to conspicuously display its return policy can, under certain circumstances, expose the retailer to liability for the amount of the purchase under California's Consumers Legal Remedies Act, which provides additional remedies, such as actual damages and injunctive relief, for unfair or deceptive acts in the sale of goods to consumers.
To avoid liability in either circumstance, retailers should take precautionary steps. They should provide ample notice if retroactively changing return policies, even if the current policy provides for retroactive changes; prominently display return policies in stores so that they are visible before purchase; verbally notify customers of return policies at the time of purchase, and provide for curbside or mail-in returns to limit crowds and promote social distancing when possible.
Retailers with in-store return policies should also remain apprised of state and local government rules regarding operating during the pandemic, including local mask ordinances, capacity limitations and in-store social distancing requirements.
Because there is no clearly established legal precedent or clear and consistent standards on how to implement and enforce such public health and safety measures, retailers must, to some extent, take matters into their own hands when establishing in-store policies to limit crowds and enforce mask usage and social distancing.
One strategy to avoid liability is to create clear policies regarding face masks, social distancing and customer limits, including how to enforce such policies in the store.
If a retailer requires masks, for example, the policy should clearly state what steps the retailer may take if a customer refuses to wear one. This includes reserving the right to ask non-mask-wearers to leave the store and return when they have a mask.
Additionally, retailers should clearly post their policies and ramifications for failing to follow store guidelines at every entrance to the store.
These postings should be large enough that a customer can easily find them and should use clear and concise language, avoiding legalese, to limit the number of people that can claim they did not understand the policy.
Likewise, retailers may consider sanitizing stations upon entry to the store, as well as posting the store's disinfection schedule and routine.
Because one of the easiest ways to reduce exposure includes crowd management, retailers should consider creating or enhancing curbside pickup programs.
This will help with managing in-store crowd sizes while still servicing the influx of shoppers during the holiday season.
In creating and implementing these policies, retailers should be aware of the potential for class actions not only based on changes to refund and return policies but also relating to misleading advertisements.
Similar to class actions based on refund and return policies, retailers may be open to potential class actions if they advertise that the store is open for certain days and times, but do not allow customers to enter the store based on COVID-19-specific procedures like capacity limitations or a failure to comply with mask mandates.
As noted, clearly posting signs identifying the store's policies should mitigate this risk and reduce the chances of false advertising claims.
Since March, thousands of legal complaints relating to COVID-19 have been filed, and this deluge of litigation is showing no signs of slowing down.
While plaintiffs may face significant hurdles in obtaining class certification and meeting Federal Rule of Civil Procedure 23 qualifications for a class action,[2] retailers that protect themselves on the front end will be most successful in defending against these lawsuits.
The clear creation and implementation of policies specific to the challenges surrounding the COVID-19 pandemic will help to reduce such legal exposure.
[1] https://www.law360.com/articles/1283023/retailers-should-look-out-for-refund-claims-after-covid-19.
[2] Id.