The legality of no-refund policies under Nigeria consumer protection law

By Oyetola Atoyebi

The interests of vendors and service providers are, on the surface, essential to the protection of their goods and services. Over time, several measures have been adopted by businesses to safeguard these interests and mitigate financial risks, particularly those associated with fraudulent returns. One of the most commonly employed measures is the no-refund or no-return policy, which seeks to prevent the return of goods once payment has been made and delivery completed.

Beyond this surface justification, however, lies a deeper legal tension that brings into focus the competing rights of two parties: businesses on the one hand, and consumers on the other. This tension has become more pronounced in today’s digital economy, where technology enables the sale of goods and services without physical inspection, and e-commerce transactions continue to grow rapidly. In many cases, consumers purchase goods solely on the basis of online descriptions, images, or promises, without the opportunity to examine the product beforehand.

It is within this context that the legality and enforceability of no-refund policies must be carefully examined, particularly in light of Nigeria’s consumer protection framework. A no-refund or no-return policy generally means that once a customer completes a purchase, the seller will neither accept the return of the item nor provide compensation or replacement. Businesses often justify this approach by arguing that liberal return policies are susceptible to abuse and may expose them to unnecessary losses. In practical terms, such policies are designed to ensure that sellers are not obligated to return a buyer’s money, regardless of dissatisfaction or a change of mind. While this may appear commercially convenient, Nigerian law places significant emphasis on fairness, transparency, and the protection of consumers from unjust practices.

The principal statute governing consumer protection in Nigeria is the Federal Competition and Consumer Protection Act 2018 (FCCPA). The Act provides a comprehensive framework regulating commercial activities and clearly prioritises the rights of consumers. Notably, several provisions of the FCCPA run contrary to the idea of an absolute no-refund policy. The Act recognises that, in addition to any right a consumer may have under other laws to return unsafe or defective goods, a consumer is entitled to a full refund where goods supplied for a specific purpose known to the supplier are found, upon delivery, to be unsuitable for that purpose. Similarly, where a consumer was unable to examine goods before delivery and, upon receipt, rejects them within a reasonable time because they do not correspond with the agreed description, sample, or expected quality, the consumer is equally entitled to a refund.

In practical terms, this means that where goods delivered to a consumer are unfit for the purpose for which they were ordered, the consumer’s right to a refund cannot be defeated by a no-refund policy. A consumer who orders a product based on particular specifications or advertised features and receives something materially different is not bound to accept it simply because the seller has declared a no-refund policy. The law intervenes to protect the consumer in such circumstances.

Beyond this, the FCCPA expressly prohibits businesses from requiring consumers to waive their statutory rights or assume unfair obligations as a condition for entering into a transaction. Any term that is unreasonable, unjust, or one-sided is void and unenforceable. This provision has significant implications for no-refund policies, as it prevents businesses from using such policies to compel consumers to surrender rights guaranteed by law. A blanket refusal to refund defective or unsuitable goods may therefore amount to an unfair contractual term and fall foul of the Act. In an attempt to navigate these restrictions, some businesses have adopted alternative approaches, such as offering store credit instead of cash refunds. Store credit allows customers to spend the refunded amount only within the same store. While this may appear distinct from a no-refund policy, the FCCPA prohibits any contractual term whose purpose or effect is to defeat the objectives of consumer protection. Where a store-credit-only policy effectively deprives a consumer of meaningful redress for defective or unsuitable goods, it may be regarded as undermining the spirit and intent of the Act. The law is clear that commercial strategies must not be employed in a manner that prioritises convenience over consumer rights. Transparency is another critical requirement under Nigerian consumer law. The FCCPA mandates that contractual terms be clear, simple, and easily understood. No-refund policies hidden in fine print or expressed in complex language may be invalid for lack of transparency. Consumers must be fully informed of their rights and obligations before entering into a transaction, not after payment has been made. The Act also guarantees consumers the right to a refund where services are not rendered as agreed. A no-refund policy that allows a service provider to retain payment despite failing to perform contractual obligations directly contradicts the objectives of the FCCPA. Whether the transaction involves transportation, travel bookings, or other services, failure to deliver entitles the consumer to appropriate redress.

Although the FCCPA prevails in the event of conflict, the Sale of Goods Act 1893, which remains a statute of general application in Nigeria, further reinforces these protections. The Act implies conditions that goods must be reasonably fit for their intended purpose and of merchantable quality. Where goods fall short of these standards, the buyer retains the right to seek remedies, including a refund, notwithstanding any no-refund policy. These implied conditions significantly limit the enforceability of absolute no-refund clauses.

Judicial decisions have further clarified the position of the law. In Patrick Chukwuma v. Peace Mass Transit Ltd, the court held that a transport company’s refusal to refund a passenger following undue delay violated the FCCPA, notwithstanding its no-refund policy, and awarded damages against the company. Similarly, in Edem Ewa Ekeng & Anor v. Wakanow.com Ltd, the court declared a no-refund policy illegal where it was communicated only after payment and used to justify failure to fulfil contractual obligations. These decisions underscore the courts’ firm stance that consumer rights cannot be overridden by unilateral policies. Ultimately, the legality of no-refund policies in Nigeria must be assessed through the lens of fairness and transparency. While businesses are not prohibited from protecting themselves against abuse, such protection cannot come at the expense of statutory consumer rights. Nigerian law does not abolish no-refund policies entirely, but it firmly rejects their use as instruments of injustice or shields for defective goods and unfulfilled services. In balancing commercial interests with consumer protection, the law seeks to promote trust, accountability, and fairness within Nigeria’s evolving commercial landscape.

Atoyebi, a Senior Advocate of Nigeria, Fellow of Chartered Institute of Arbitrators (UK), a Notary Public, and the Managing Partner at Omaplex Law Firm, writes from Abuja.

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