When is a down payment refundable?

UPDATED: Oct 1, 2022

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When is a down payment refundable?

I made a down payment on a car stereo that would be installed a week later. No products were ordered and no goods or services were transferred from the seller to the buyer. In other words, the business was just holding my money. The next morning, I called the business back to inform them that I needed a refund due to replacing an expensive home appliance. My down payment was made electronically using a Visa card and I requested that the money be placed back on the card. The owner of the business was making excuses and acting shady as if he didn’t want to refund my money. However, the business owner did say verbally that he would in fact complete the card refund transaction today but couldn’t advise how long it would take. His behavior was very shady and concerns me. Can a business just take your money with no goods or services provided?

Asked on July 11, 2019 under Business Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Yes, they can keep your money. When you gave them the down payment, you entered into a contract, whether written or oral (unwritten) that they would install a stereo and you would pay them to do so. When you decided to not buy the stereo from them, you breach or violated the agreement; that breach enables them to keep the deposit. When a buyer pulls out of a deal, unless there was some "refund" policy enabling them to retain their deposit, they forfeit it. And if you file a fraud complaint when there is no fraud--and based on what you write, there is no fraud, since they can keep the deposit--they can sue you or look to file charges against you for a false report or claim.
It doesn't matter if they were "just holding" you money: you can't get deposits back when you back out.

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