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Startups Startup helps online shoppers reclaim duty paid on cross-border returns

Richard Vining, Jessica Kerr and David Gustavson are the founders of Duty-Back, a Victoria-based startup that aims to help online shoppers reclaim the duty paid on cross-boarder returns

Duty-Back Refund Solutions Inc

For all the things the rise of online retail has led to, one corollary was perhaps inevitable: the rise of online returns. Just as a customer might take three items he tries on in a change room and hand the fourth one back to an attendant ready to re-fold it for the hundredth time, it's no longer unusual for a shopper to order four shirts online, only to pop one right back into the mail afterward.

Eager to entice buyers to the Internet, online retailers have taken to promising free shipping both ways, including returns. But when this commerce crosses borders, shoppers hit a hitch: Buyers have to pay Canadian sales taxes and duties when goods cross the border.

This seemed like an opportunity to Jessica Kerr, a business student at the University of Victoria, and an online shopper herself.

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"These refunds were at zero cost to me – or so I thought – until I realized that I was paying a lot of money in duty, and I wasn't getting any of it back," she says.

Ms. Kerr soon discovered that the refund process was predictably labourious. Duty and taxes are eligible for a refund in case of a cross-border return, the merchant can't make that refund themselves. Once that money's passed into the hands of the Canadian government, it takes paperwork to prise it free.

What's more, there's no way of doing it online. The standard process of printing forms, filling out non-intuitive questionnaires, and mailing documentation hardly seemed worth it for refunds that might only total $10 or $20.

Ms. Kerr decided there had to be a better way. So, along with friends David Gustavson and Richard Vining – who'd become CEO and COO, respectively – she founded Duty-Back Refund Solutions Inc., a simple service that promises online shoppers duty returns made simple enough to be worth their time.

Duty-Back aims to automate the rebate process as far as it can. Users sign up for a re-useable profile. There's only a few fields to fill in, and while there's no getting around the documentation that the government requires – proof of shipment like a waybill and proof of refund, like a credit card statement – Duty-Back takes the process online, accepting scans or even smartphone photos of the paperwork.

From there, in the time-honoured tradition of accountants and tax-preparation services, Duty-Back does the unglamorous work of preparing the paperwork, dealing with the government and securing the funds. Acting as the customer's agent, Duty-Back completes the transaction as an electronic money transfer, keeping a 15 per cent cut so long as the government grants the rebate.

After about six months in development, the trio launched the website three weeks ago. The company says they're the only players operating in this space. And while they're not talking numbers yet, one surprise that's come with the launch is that, despite the fact that the service is aimed at individuals, they're already in discussions with retailers who are interested in building the service into their online retail operation.

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"We thought it would just be individuals, but businesses are seeking us out," says Mr. Vining. "We're kind of the missing link in the return process."

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