Consumer Electronics Refurbisment 3

[nornrich]

Hello All,

Our company is bringing an electronics product line to the retail market place. We have gotten to a point where we are discussing how to handle customer returns. We are going to be doing electrical testing and rework of customer returns in house and are debating what constitutes a new product vs. a refurbished product. We have experience with a simliar product that we source from another company and they are currently handling rework and repack. They are not labeling the product as refurbished. We are thinking of doing the same, but I wanted to check and see if there are any codes or regulations governing this issue.

Regards,

Rich...

Richard Nornhold, PE
nornrich@redrose.net

 

[pablo02]

It probably depends upon your country's laws and regulations -- I think, but can not say for sure, that any such items must be labeled as "refurbished" in the USA otherwise, you are probably violating consumer fraud laws (if the US doesn't have them, you will find that almost all states have them) -- and, you'd probably face a class action lawsuit by some hungry lawyer...

basically, if the article has been sold and it leaves the premises or is opened on the premises, it is no longer "new", it's "used" -- (in my opinion)

but, surely there are those who have a diffent opinion..

 

[IRstuff]

My two cents:

A new product is technically one which has never been in service to the end user or effective end user. Therefore, re-work as part of the manufacturing process does not need to be disclosed. Demo and open-box products are not "new."

Refurbishment is the process of taking a product that has been placed in service and has been returned to some processing facility that ostensibly re-manufactures the product to meet the performance and functionality of a new product.

Repair is the process of correcting a defect or fault in a product. But repair does not imply anything about the overall functionality of the product nor its overall useability or serviceability.






You may wish to dig into the FTC website to see if there is more information.

TTFN

 

[nornrich]

pablo02,

I think your opinion is the correct one, but I am looking for tangible regs or rulings from a governing body that quantifies this issue. We have a fairly high level of returns on the current product we are selling, but from the returns we can see that 70-80% of the product was never used. We are only seeing 20-30% of product being returned due to a manufacturing problem. In the case of the 70-80% being returned for non-manufacturing defects, the only thing that would need to be done is to repackage the product and it is as good as new.

Rich....


Richard Nornhold, PE
nornrich@redrose.net

 

[nornrich]

Also I forgot to mention that I have someone at the FTC doing some digging

Rich.....

Richard Nornhold, PE
nornrich@redrose.net

 

[IRstuff]

I would at least do what Fry's Electronics does, which is to put a returned item sticker on the re-packaged product.

They still sell for the same price and there is an implication that the seller had determined that the product was still functional and had not been "used" sufficiently to consider the product to have been used.

Disclosure is always a good thing.

Should there be a latent defect found later and the fact that you didn't disclose that it was a returned product...

TTFN

 

[jraef]

Another thought is to coordinate this with your warranty program. At our company, if a product is returned for what turns out to be a warranty replacement, it is replaced with a refurbished unit. The legal issue is that we are replacing it in "like kind", meaning that they sent us a broken used unit, we sent them back a working used unit. The key here is that we never state in our warranty policy that replacement is with new product. We state that waranties are handled with repair or replacement, at our discretion.

In our system the demand for replacements is always higher than the number of refurbished units available, so we are never building up an overstock of "used" units. If your system is upside down from that then it may not work.

Years ago I worked for Sears selling power tools and they had a brisk business in selling out-of-box and refurbished tools by offering the same warranty as new, but a reduced price. There was always a market for them.

Quando Omni Flunkus Moritati

 

[nbucska]

As non-lawyer, nevertheless knowing the principle: "de minimis non curat lex", I would think that if the product
is not very critical ( i.e. failure doesn't cause harm,
large damage or cost ), the cost of the product is low and
the return rate is small, the cost of separating the
returns from new products may be prohibitive and the risk
of non-separating them is insignificant.




<nbucska@pcperipherals.com>

 

[TwnB]

Rich,

If you have 20 - 30 percent of your units returned because of manufacturing defects I think you have bigger problems!

 

[PUMPDESIGNER]

Please do not hate me for this but ...
Enron paid millions upon millions, to have lawyers study the energy codes to nth degree, only wishing to know if they had broken any law or not.
Any fool could have told them they were immoral and evil.
So what were they looking for?
To see if they could actually be pinned down for what they were doing, when in fact they all knew that they were doing wrong and immoral. But they would not be governed by their morals, they turn instead to another law, the letter of the law that Clinton lives by because he has no morals.

Wow, in an engineering forum, what a nut huh?

Make your life simpler than Enron's clowns did.
Make a product that has fewer problems and a product that you can make money at without this nonsense, or get out.
Let some other hard head thick skinned fool fight with the public forever.

PUMPDESIGNER

 

[elmotomes]

Well said.

 

[etarhan]

Hi TwnB,

It looks like you made an error similar to mine. I understand (after thinking twice) that the 20-30% is related to the returned units, not the manufactured ones. Just because the 70-80% is being returned unopened. Thus, the guys are getting back a total of 100% of what they sell, which does not look like a viable business.

Hi Nornrich,

Perhaps it would help if you told us the percentage of the returned units in relation to your sales. This may be a negligible figure, but I think you would not take it as an issue if it were such.

Using the returned units to cover the warranty returns is not a bad idea.

Perhaps if you calculated the cost involved in the repackaging of the returned (working) units, you could come to the resolution that selling them as returns (under the same warranty) at a reduced price is more or less equal. This could save you a lot of headaches, legally and logistics-wise. At any rate, I, as a consumer, would not like to pay the original price (thinking that it's a factory fresh item) for a gadged rejected by someone for any reason.

Another thought: 70-80% of the returns being unused could mean a number of things. Among them is the possibility that you are being misleading and misrepresenting in your advertisements or in other descriptions of your products, so the consumer is throwing the product back to its manufacturer because (s)he is expecting a much better thing.
Some small modifications in the wording could also save a lot of headaches (and returns).

Good luck,
Engin

 

[nornrich]

All,

Sorry for adding confusion to the mixture. To clear up some facts. We are seeing a level of about 10% of sales returned. Of this 10% total returns we are seeing the breakdown of reason for returns is 20-30% are a result of manufacturing defects or 2-3% of all units have a manufacturing defect. The other 70-80% of the returns are shear consumer laziness or intimidation. We know this because in inspecting the returns we are getting boxes that were never opened and on the units that were opened the units being tested function correctly.

I did find some rulings from the FTC that states that any product that has been put out into the marketplace and made it into the hands of the consumer cannot be sold as &quot;new&quot; product. Due to the &quot;consumer's preference for new or un-used goods&quot; any return must be tracked in inventory and clearly labeled when put back into the retail mareketplace as used or refurbished. Thanks for all your help and input.

Regards,

Rich....

Richard Nornhold, PE
nornrich@redrose.net

 

[Spex]

Hmmm...some interesting points.

We get some returns, but almost invariably when they're tested we find they work just fine and the problem is with the way they were installed or used. In this case, once the product has gone back through the test and inspection process (replacing any damaged packaging or parts just as would happen with a brand new product if these parts were damaged during production) it is deemed &quot;as good as new&quot; and is re-sold.

Parts that really are damaged by customers are most often fried and aren't fit for repair. The few parts that do come back in a repairable state usually go into demonstration stock so they get used, but not by customers.