We run an ecommerce site, selling to consumers. In relation to returns, we want to offer customers the options of using our own preferred shipping provider for the returns, or selecting their own. Can we do this? Can we charge them for the cost of returns (using either method)? Who is responsible if goods are lost/damaged after being sent back to us?
There are two distinct types of returns under statute: returns under sale of goods law, and returns under distance selling law.
Sale of goods law
Where consumers have a right to return goods because they are defective, misdescribed etc, then that right cannot be made conditional upon them using your preferred means of return (Sections 12 to 15 of the Sale of Goods Act 1979, in combination with Section 6 of the Unfair Contract Terms Act 1977).
There is no specific rule against you including an independent obligation upon the consumer to use your preferred means of return, but depending upon the circumstances such a requirement might be unenforceable (e.g. as an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999). Note, also, that the abridgement of consumer rights can amount to a criminal offence under the Consumer Protection from Unfair Trading Regulations 2008, so it's worth treading carefully here.
In all such cases, you should be paying the costs of the return (and where you are replacing the goods, the costs of re-delivery).
Distance selling law
Where consumers have a right to return goods under the distance selling legislation, you can (on my reading of the Distance Selling Regulations) give the customer the option of using your preferred shipping provider or their own preferred provider (or returning the goods themselves).
If they don't use your own preferred provider, they have "a duty to take reasonable care to see that [the goods] are received ... and not damaged in transit" (Regulation 17(6)). If the goods are lost or damaged during return shipping then the loss would fall on you, unless the customer had breached this duty.
The only charges you can make re return shipping are set out in Regulation 14:
(1) On the cancellation of a contract under regulation 10, the supplier shall reimburse any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was made free of any charge, less any charge made in accordance with paragraph (5).
(5) Subject to paragraphs (6) and (7), the supplier may make a charge, not exceeding the direct costs of recovering any goods supplied under the contract, where a term of the contract provides that the consumer must return any goods supplied if he cancels the contract under regulation 10 but the consumer does not comply with this provision or returns the goods at the expense of the supplier.
(6) Paragraph (5) shall not apply where - (a) the consumer cancels in circumstances where he has the right to reject the goods under a term of the contract, including a term implied by virtue of any enactment, or (b) the term requiring the consumer to return any goods supplied if he cancels the contract is an “unfair term” within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999.
What this means, when read in conjunction with Regulation 17, is that you can ask a customer to pay for the cost of return via your preferred method, and deduct such costs from the customer's refund, providing the contract term providing for such method and costs is not "unfair".
See Regulations 14 and 17 of the DSRs for more details of this mess: