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Yes. If the freehub was faulty then their T&C's can't trump your statutory rights - this is covered by the Consumer Rights Act. From Which?
Any terms and conditions that say you must cover the cost of returning an item wouldn’t apply where the goods being returned are faulty.
To be fair nothing in the text you've quoted mentions faulty goods. Have you asked them to pay the cost of the return yet?
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If the part has a fault:
If you encounter a problem with any of our products,we can sometimes solve it without the need for a return. Please email us at contact@superstarcomponents.com and we will try our best to resolve it. Photos or a short video of the issue can also be useful.
Please be honest, we want to help you but we need all the facts to fully understand your problem and solve it.
You must include a fully completed returns form Click here to download a returns form. Items received without returns forms, or with incomplete returns forms may be refused and will lead to a delay in processing.
All items MUST be returned first to be eligible for refund, exchange or warranty replacement without exception. We will refund your postage costs where appropriate. PLEASE NOTE: We will only refund up to a maximum of £6.50. If you wish to insure the item or guarantee delivery, this is at the customer's cost.
Please read the Postage Refund Guidelines carefully and include all required details and receipts on your returns form. We cannot process postage refunds retrospectively.
Not yet, I haven't got the wheel back though it has been dispatched.
Here's one. My freehub shat itself on a ride so I returned it to the retailer for warranty inspection (me paying postage, £12 or so).
They've approved the warranty and rebuilt my wheel with a new hub, however now I see in their Ts and Cs that:
I, obviously, did not do this. Do I have a leg to stand on? In the grand scheme of things it's not a lot but due to a component failure I've had to strip a wheel at a cost of tubeless tape, sealant and my time, as well as having spent money to get a working wheel again.