When shopping online for electrical goods, you may spot a number of items labelled as "refurbished." These products typically carry a lower price tag than brand new items and some even come with a 12-month guarantee. It's perfectly legal to sell refurbished goods in the United States as long as the seller accurately represents the characteristics of the product.
There's nothing wrong with selling refurbished goods to consumers as long as the item is fit for its intended purpose and the seller does not represent that the item is new.
No Legal Definition of Refurbished
While the phrase "refurbished" implies that a seller has repaired the product and put it into good working condition, there's actually no legal definition of refurbished goods. As such, the expression can cover any number of scenarios, such as:
- A brand new item that has been returned by a consumer who never used the product
- A used item that has been repaired and reconditioned by the manufacturer or a third party
- A demo unit
- A new item that has damaged packaging
The basic rule for refurbished goods is that once a product is returned, it cannot be sold as new, even if the product was never used. So, any of these items may be lawfully sold as "refurbished" for a fraction of the cost of a new item.
Selling Refurbished as New is a Type of Fraud
Federal truth-in-advertising law, administered by the U.S. Federal Trade Commission, requires that refurbished and reconditioned items are properly labeled. This means that a seller cannot describe a returned or refurbished item as "new." Where a seller advertises a smartphone as new, for example, and in fact it has been used and refurbished, he could face criminal fraud charges, fines and jail time, if your local prosecutor deems the case worth pursuing. To get the ball rolling on such charges, you would have to file a police report. Criminal aspect aside, as a buyer, you can file a lawsuit against the supplier for misrepresentation. If successful, you will be able to cancel the transaction and at least get your money back, and your state may have a law that provides you with further money damages.
Implied Warranties Do Not Apply to As-Is Items
Most states have laws that imply certain quality warranties into every consumer transaction. In California, for example, there's an implied warranty that the goods you buy are fit for their intended purpose, also called a warranty of merchantability. Fitness for a particular purpose means that your item must be capable of doing the job it was designed to perform; for example, a washing machine must be able to wash clothes even when it is sold as refurbished.
The only exception is where the item is sold "as is." In that case, you take the risk with respect to whether the product works, and you have no chance to return the item if it turns out to be defective.
Let the Buyer Beware
Ultimately, it's up to the consumer to protect himself from low-quality refurbishments. A seller who repairs a used product, sells it as "refurbished" and makes no other representations about its quality has probably done nothing wrong if the product breaks in three months' time. Reputable sellers will often offer express warranties with their refurbished goods, such as a no-questions-asked returns policy or a free repair if the product breaks within a 12-month period. Warranties are a key element in your armor against unsatisfactory refurbishments. Depending on the terms of the warranty, you should have greater protection when the product is backed by a warranty than when it is sold as-is.