So your gifts aren't worth the paper they're wrapped in...

Millions of pounds will have been spent on Christmas presents over the past few weeks but what are your rights when it comes to getting a refund on faulty or unwanted gifts from high street and online retailers?

It's not as straightforward as you might think, says Keith Richards, the author of the Which? consumer guide 450 Legal Problems Solved. Your chances of getting your money back depend on the nature of the problem and the store's policy on returns. "There is a lot of confusion on this point," says Richards. "If there's something wrong with an item then that will automatically trigger consumer rights, but there is no legal requirement for shops to accept returns if you have simply changed your mind."

So what are these consumer rights and how can you improve your chances of getting a sympathetic hearing from a retailer if you take back Aunt Vera's ghastly knitted jumper with Santa's head poking out of a chimney?

Faulty goods

Few things are more annoying at Christmas than receiving a gift that doesn't work, or which immediately falls apart. The good news is that you automatically have protection, regardless of whether or not you have splashed out on an extended warranty. Anything you buy, in the high street or online, has to match the description given, be of satisfactory quality, and be suitable for its intended purpose. If not, you are entitled to a refund, repair or replacement.

Also, if a fault occurs within the first six months, the retailer has to prove that the problem was not present at the time of purchase. "Consumers still have rights after six months but the grey area concerns whether they can expect a full refund," adds Richards. One important point to consider is that these legal rights apply only to the purchaser of the product and not the recipient of the gift itself. In practice, however, presenting a receipt is usually enough for a retailer.

"If you can show them proof of purchase then most shops are unlikely to start quibbling over who actually bought the item, but I have known this to become an issue in some situations so it is worth bearing in mind," says Richards.

In most cases you will be able to reach a satisfactory conclusion, but if not you can take legal action through the Small Claims Court. It costs relatively little and you can bring cases in England and Wales for disputes involving sums up to £5,000.

Unwanted items

The auction website eBay estimates that a whopping £700m will have been wasted on unwanted gifts this Christmas – the equivalent of £28.53 per person – with uncles, aunts and in-laws most likely to be the guilty parties.

Topping the list of least-wanted presents are power tools and other DIY equipment, home appliances and "experiences", such as a trip in a hot-air balloon. More than a quarter of Britons plan to recycle these gifts by passing them on to someone else. It is a common misconception that you can change your mind and return anything to a shop, but that's not the case. A shopkeeper is under no obligation to refund or exchange a gift just because the person doesn't like it.

"The confusion is due to the fact that so many shops offer no-quibble returns policies, but that is simply a choice made by businesses in the interests of good customer service," says Richards. "There is no legal requirement for them to do so."

That's why it's worth checking at the time of purchase whether the outlet will accept returned gifts, and to keep hold of the receipt just in case. However, what can you do with an unwanted present if returning it is not an option?

You can always sell it online, points out Julia Hutton-Potts, of eBay. With more than 10 million users in the UK, there is a good chance of finding a buyer on the website – no matter how obscure the item. "We all know how it feels to open a turkey of a gift at Christmas, but whether it's the wrong size, a duplicate or just not for you, re-homing an unwanted present means it will find a new owner and you will be able to buy something you want," says Hutton-Potts.

Of course, there are alternatives. You can pass them on to someone else. Websites such as freecycle.org enable you to find new homes for unwanted items. Another is jumbleaid.com, where buyers can get items in exchange for charitable donations. Charity shops themselves are also always in need of good-quality items. Contact the Association of Charity Shops (charityshops.org.uk) for a list of outlets.

Extended warranties

It can be very tempting to buy extended warranties and guarantees – especially if you are on the wrong end of a silver-tongued salesman – but you need to think carefully before parting with your money, warns Moira Haynes at Citizens Advice. "You need to consider whether you can live without the item while it is being mended or whether you can afford to replace it," she says. "It's also important to see who is offering the cover and if you'll still be covered if the retailer goes out of business."

Many goods come with a free one-year warranty on top of your statutory rights, which should be more than enough for most situations. However, some policies do offer benefits such as the use of a similar item while your product is being repaired.

These policies range from straightforward insurances to service agreements, so the type of protection offered – and the level of cover this includes – can vary enormously, so if you do want one make sure you shop around for the best deals.

Shopping online

Not only do the same rights apply to buying from online retailers as they do on the high street, but there is also an extra layer of protection in place because you will not have seen the item before you purchased it. In most cases, you have seven working days from the receipt of the goods in which to change your mind and get a full refund. Although you may be asked to cover reasonable costs of return carriage, these should have been made clear in the terms and conditions. To cancel your order, you must tell the seller in writing. If sending a letter, make sure it is mailed by registered post, so you can prove that you sent it and track its progress.

However, it is a different scenario with second-hand goods bought from individuals on auction sites such as eBay. As Richards points out: "The only rights you will have in this case will concern whether the goods bought actually meet the description given."

According to Dan Wilson, the author of Make Serious Money On eBay UK, there are a number of ways to spot potentially dodgy sellers, including inflated postage costs, no photo of the item for sale, or a request to pay for the item with cash. In addition, buyers should consider using the money transfer service PayPal for purchases as this usually offers buyer protection for certain items.

"If a listing on eBay has two or more danger signs then the chances are that it's best avoided," says Wilson. "Some areas are also more risky than others. For example, mobile phones and plasma television screens will attract more fraudsters than stamps or Beanie Babies."

Avoid problems in sales

Whether or not you've had a bad experience buying Christmas presents, it makes sense to be equipped to deal with the annual sales, most of which will start today (Boxing Day) with shoppers expected to start queuing at the crack of dawn.

The good news is that your consumer rights remain exactly the same during the January sales as at any other time of the year. "People will have the same rights to refunds, repairs and replacements as they would on full-price items," says a spokeswoman for Consumer Direct. "If a product is reduced because it's faulty, this should be pointed out to them in advance."

However, in the rush to get your chosen items to the till, it's worth taking a couple of minutes to double-check the store's returns policy and whether refunds, exchanges or credit notes will be made available if you do bring the goods back.

Keep your receipts, as well as any other proofs of purchase, such as bank or credit-card statements. If the item is for someone else, then ask if the shop provides gift receipts that enable the recipient to make a claim against the retailer. Check your items as soon as possible. The quicker you can return a faulty product, or an unwanted one if you have been reassured that the shop will take it back, the better your chances of enjoying a positive outcome.

However, stores do have the right to alter their returns policies, so if you have any queries you can give Consumer Direct a call on 08454 040506 or visit its website at www.consumerdirect.gov.uk.

Buying on credit cards

It's worth flashing the plastic on big-ticket items. For goods costing more than £100 and less than £30,000, a credit card can provide another useful layer of consumer protection as the card provider becomes liable for breaches of contract. Generally, this includes cover in case the goods never arrive, are faulty or not as described, or are damaged.

The protection also applies to purchases where only part of the payment was made by the credit card – even if it was only the initial £10 deposit.

Giving something back: The art of re-gifting

*More than three-quarters (78 per cent) of shoppers think it is acceptable to recycle gifts, with more women than men admitting they are repeat "offenders".

*Topping the UK's list of least-wanted presents are power tools and other DIY equipment, as well as home appliances. More than a quarter of Britons plan to recycle these gifts by passing them on to someone else, or by selling them on eBay.

*A US survey last year found the items most likely to be "regifted" were ornaments and pampering products, such as body lotions and bubble bath. Those least likely to be recycled were hand-made presents and "experience" gifts such as concert and theatre tickets.

*A separate study in 2008 estimated that £48m of unwanted gifts would be on their way to Britain's landfill sites after the festive season.