The Legality of no-refund Policies under Nigerian Consumer Protection Law

Contributor: Obiora Chisom Ifediora

Introduction

The interests of vendors and service providers are, at the periphery, essential for protection of their goods and services. Several measures have been implemented by businesses to ensure the safeguard of said interests and to mitigate financial risks; these measures targeted at preventing fraudulent returns. Among such measures, the no-refund/no-return policy is employed to prevent the return of goods once delivered.

However, a step further beyond the surface, and a delve into the subject of discussion would present one with a clash of the rights of two broad parties: the business on the one hand, and that of the consumer on the other hand. In today’s digital age, where technology facilitates the sale of goods and services without the need for physical inspection, and with the rapid growth of e-commerce, consumers often do not have the opportunity to examine the products they order beforehand. Thus, understanding the need for balance is crucial to ensuring that commercial practices do not undermine consumer rights.

This work examines the concept of no-refund policies in Nigeria, their legal implications, and the rights of consumers, with a view to evaluating how such policies align with existing consumer protection frameworks.

The Concept of No-Refund/No-Return Policy in Commercial Transactions

A no-refund/no-return policy explains that a business does not accept returns after a customer finalize a purchase, and no compensation or replacement of the item will be made.^[1] Usually, vendors make use of this policy to reduce the cost and risks associated with returns, as some sellers have argued that dishonest buyers may exploit an option for returns at the company’s expense.^[2] This provision ensures that the seller is not obligated to return the buyer’s money, regardless of dissatisfaction or change of mind.

Legal Framework for Consumer Protection in Nigeria

The Federal Competition and Consumer Protection Act 2018

The Federal Competition and Consumer Protection Act 2018 (FCCPA) provides a comprehensive legal framework for consumer protection in Nigeria, covering all commercial activities conducted within the country. For the purposes of protecting the rights of consumers, it made provisions which go contrary to the principle of no-refund/no-return policy. It is pertinent to examine the provisions of the Act and assess how they align with the principles underlying no-refund policies in Nigeria.

1. The Act is to the effect that besides the consumer’s right to return unsafe or defective goods under any law, a consumer can get a full refund from the supplier if:
   1. the goods were meant for a specific purpose that the supplier knew about, but after delivery, the goods are found to be unsuitable for that purpose; or
   2. the consumer could not check the goods before delivery, and after receiving them, rejects them within a reasonable time because they do not match the description, sample, or expected type and quality agreed upon in the sale.^[3]

Therefore, if goods delivered to a consumer are unfit or unsuitable for the purpose for which they were originally ordered, the consumer is entitled to return the goods and receive a full refund. For instance, if a consumer orders a blender specifically for making smoothies, but upon delivery it is found to be faulty and cannot perform that function, the consumer has the right to return the blender and receive a full refund. On the other arm of the provision, which is where a consumer is not opportune to examine the goods beforehand, it could happen in a situation where a consumer orders, for instance, a smartphone online based on its advertised features and specifications, but upon delivery discovers that the phone does not match the description; perhaps it has a smaller storage capacity or a different model. In this case, they can reject the product within a reasonable time and request a full refund.

1. Additionally, the Act provides that an undertaking shall not require a consumer, or other person to whom any goods or services are supplied at the direction of the consumer, to waive any rights, assume any obligation, or waive any liability of the undertaking, on terms that are unfair, unreasonable or unjust, or impose any term as a condition of entering into a transaction.^[4] In other words, a business cannot force a consumer to give up their legal rights, take on unfair responsibilities, or accept any liability as a condition of buying goods or using a service. Any terms that are unreasonable, unjust, or one-sided are not allowed under the law.

This provision directly impacts the discussion on no-refund policies. It implies that businesses cannot enforce a blanket no-refund policy in a way that forces consumers to waive their rights or accept unfair conditions. Under Nigerian consumer protection law, any term that denies a consumer the ability to seek a refund for defective or unsuitable goods may be considered unreasonable or unjust. Therefore, no-refund policies must be carefully structured to avoid violating the rights guaranteed to consumers, ensuring that businesses cannot use such policies to circumvent their legal obligations.

1. In view of the foregoing, there are other strategies that businesses may employ which may seem distinct from no-refund policy, but still aimed at protecting the interest of the business. A good example is the offer of Store Credit Only by businesses. Store credit is money that customers can only spend at one specific store.^[5] When a customer returns an item, businesses often give customers store credit instead of real cash.^[6] The amount usually equals what was paid for the returned item and customers can use the credit to buy other items from the same store only.^[7]

While this may not be expressly regarded as a no-refund policy, the provision of the FCCPA 2018 prohibits businesses from including any term in a transaction or agreement if its general purpose or effect is to defeat the objectives and policy of the Act,^[8] namely the protection of consumer rights. While businesses may adopt alternative strategies, such as issuing store credit instead of cash refunds, this provision could limit the enforceability of such approaches if they effectively restrict consumers from exercising their legal rights. For instance, if a store’s “Credit Store Only” policy prevents a consumer from obtaining cash refund for defective or unsuitable goods, it may be viewed as defeating the purpose of the Act. In this way, the law prioritizes consumer protection over business convenience, ensuring that commercial strategies do not come at the expense of fundamental consumer rights.

1. In furtherance, the Act recognizes the consumer’s right to transparency, preventing businesses from hiding important obligations or responsibilities within complex contractual terms. This is particularly relevant for clauses that limit a vendor’s liability or require the consumer to assume certain risks.^[9] A no-refund policy may be considered non-transparent if it is buried in fine print or expressed in complicated legal language. The Act requires that all consumer agreements be clear and easily understood, ensuring that consumers are fully informed of their rights and responsibilities before entering into a transaction. Any hidden or poorly disclosed no-refund clause would therefore contravene this principle.
2. Finally, the Act guarantees consumers the right to a refund when businesses fail to deliver services as agreed.^[10] A no-refund policy undermines this fundamental right, leaving consumers without recourse when services are not provided within the stipulated time. For instance, if a consumer pays for a service that is subsequently not rendered on time, a no-refund policy allows the service provider to retain the payment without fulfilling their contractual obligations. This practice directly contradicts the FCCPA’s objective of ensuring fair, transparent, and timely service delivery.

The Sale of Goods Act 1893

The Act is one of the statutes of General Application in force in Nigeria.^[11] Although an old law, it makes provisions that govern and regulate the sale of goods in Nigeria, and the rights and obligations accruing to buyers and sellers. Although the FCCPA prevails in the event of any conflict, the Sale of Goods Act still provides essential principles governing the quality and suitability of goods.

The SOGA provides that where a buyer informs the seller the specific purpose for which they need the goods, and it is the kind of goods the seller usually supplies, the law assumes that the goods must be suitable for that purpose.^[12] In other words, the buyer has a right to expect that the goods will work properly for the reason they were bought. Also, goods are deemed to be of merchantable quality where they are reasonably fit for the ordinary purposes for which goods of that description are commonly purchased, and possess durability.^[13]

These implied conditions inherently restrict the validity of absolute no-refund policies, especially where goods fail to satisfy the required standards.^[14] Where a product is defective or unfit for its intended purpose, the buyer retains the right to seek appropriate remedies, including a refund, notwithstanding the presence of a no-refund policy.

Case Laws on No-Refund Policies

Judicial decisions in Nigeria have played a significant role in clarifying the legality and enforceability of no-refund policies, particularly in relation to the rights of consumers and the obligations of service providers under existing consumer protection laws. A landmark case that will aid in the better understanding of the discussion is the case of Patrick Chukwuma v. Peace Mass Transit Limited.^[15]

In that case, the plaintiff, Patrick Chukwunwike Chukwuma, purchased a transport ticket for ₦500 (five hundred naira) from the defendant, Peace Mass Transit Ltd., for a journey from Obollo Afor to Enugu. Owing to undue delay by the defendant, the plaintiff cancelled the trip and requested a refund, which was refused on the basis of the defendant’s “no-refund” policy. Dissatisfied, the plaintiff issued a demand letter that went unacknowledged and subsequently instituted an action by originating summons, seeking a judicial interpretation on whether the defendant’s no-refund policy contravened section 120 of the Federal Competition and Consumer Protection Act 2018, particularly given the defendant’s failure to fulfil its contractual obligation to transport him. The court found the company’s policy to violate the FCCPA and consequently ordered Peace Mass Transit to pay the sum of N500,000 (five hundred thousand naira) in damages.

Also, in Edem Ewa Ekeng & Anor v. Wakanow.com Limited,^[16] the Claimants booked a flight to London through Wakanow.com and later requested a change of destination and rescheduling, for which they made additional payments. The company negligently failed to effect the changes, causing the Claimants to miss their flight. Upon requesting a refund, Wakanow refunded only part of the payment, relying on its no-refund policy. The Claimants consequently filed an action in 2022 seeking recovery of the full amount and damages for the company’s failure to fulfil its obligation.  It was held that the Defendant was liable having acted negligently in failing to reschedule the ticket as agreed by the parties. The Court specifically held that the purported no refund of payment policy of the Defendant which was only communicated to the Claimants after the Claimants have made payment for the flight tickets is illegal, null, void and not binding on the Claimants.

These judicial decisions carry significant consequences for businesses operating in Nigeria, reflecting the courts’ firm stance on protecting consumer rights and enforcing the provisions of the FCCPA. Companies must therefore ensure that their refund and return policies align with legal requirements. Adopting fair and well-communicated policies is instrumental in strengthening consumer confidence and promoting sustainable business relationships.

Conclusion

Summarily, the legality of no-refund policies under Nigerian consumer protection law must be viewed through the lens of fairness and transparency. The FCCPA and relevant judicial decisions emphasize that such policies cannot override consumers’ statutory rights to refunds or redress where goods or services are defective or undelivered. Businesses must therefore align their practices with the law, balancing commercial interests with consumer rights to ensure compliance within Nigeria’s evolving commercial landscape. 

REFERENCE

1. Komnenic, M, ‘No Refund Policy’, <https://share.google/DLtwZNThkQBN3CA8F> 7 February, 2025, accessed 20 October, 2025. ↑
2. Essien, I, et al, ‘The Concept of “No Returns, No Refunds” in E-Commerce and Consumer Rights under the Federal Competition and Consumer Protection Act (FCCPA) 2018’, < https://share.google/sHawZWmlP6OzxXv8A> 14 February, 2025, accessed 20 October, 2025. ↑
3. FCCPA 2018, s 122. ↑
4. Ibid, s 127(1)(c). ↑
5. Dopson, E, ‘What is Store Credit? How to Use it to Sell More’, < https://www.shopify.com/ng/retail/store-credit-for-customer-retention> 7 May, 2025, accessed 20 October, 2025. ↑
6. Ibid. ↑
7. Ibid. ↑
8. FCCPA 2018, s 129(1)(a). ↑
9. Ibid, s 128. ↑
10. Ibid, s 130. ↑
11. Shehu, IA & Usman, AS, ‘A Critical Examination of Implied Terms under Sales of Goods Act’ (2025) 12(8), International Journal of Multidisciplinary Research and Development, p 23. ↑
12. SOGA, s 14. ↑
13. Ibid. ↑
14. Gbahabo, E, et al, ‘The Legality of No-Refund Policies under Nigerian Consumer Protection Laws’, <https://share.google/sLJBtkPeRgeOROF59> 11 June, 2025, accessed 20 October, 2025. ↑
15. Suit No: E/514/202 (Unreported). ↑
16. Suit No. SCC/LAG/184/2022 (Unreported). ↑