A retail store may allow a customer to return an item he bought, if he is not happy with the item. The retail store may give the customer his cash back or reverse the charges on his credit card, or it may keep the customer's money and offer store credit. With store credit, the store opens an account with a positive balance for the customer, so he can apply this balance toward the cost of another purchase.

Policy Terms

A retail store may offer a cash refund for certain returns and only allow a store credit for others. When a store establishes a return policy, it includes conditions such as bringing back the original box and wrapper that the product was sold in, bringing back the receipt and returning the product within a certain time period, such as a week. The customer may have to satisfy all of the conditions of the return policy to receive a cash refund.

Displaying the Policy

State law may require a retailer to display a poster that explains the store credit policy where customers can view it, although it usually does not force the retail store to offer store credit on all returns. State law may grant an unsatisfied customer certain rights when the retailer doesn't put this poster up, such as the right to receive a cash refund for an item within a week if the item is still in its original condition.

Store Credit Account

When the customer returns to make a new purchase, the store credit may not match the new bill exactly. If the new purchase exceeds the store credit, the customer still has to pay the remaining portion of the bill, and if the customer has remaining store credit, she can use it to make a future purchase. Store credit operates in a similar manner to a store gift card. Store credit may expire after several years, depending on the period that state law establishes.

Damaged Products

State law may grant the customer additional rights if the retail store sold a customer a scratched, broken or otherwise nonfunctional product. State law may not allow a retail store to only offer store credit if the product is damaged when the retail store sold it because the merchant makes an implicit promise that the product will serve its advertised purpose. This rule may not apply if the merchant clearly labeled a broken product for sale in as-is condition.