We sell motor vehicle parts. When a customer returns an item for a refund, we charge a 20% fee for our handling.

Answer

When a customer returns a product and wants a refund, it is reprehensible for a Muslim to take undue advantage by charging him a fee for the refund.

Firstly, if the item is returned without valid reason, then legally (i.e. from the Fiqhi point of view), the seller is not obliged to accept it and make a refund. However, if he does, then Rasulullah (sallallahu alayhi wasallam) said that Allah Ta'ala will forgive his sins on the Day of Qiyaamah.

When this has been promised by Nabi-e-Kareem (sallallahu alayhi wasallam), then it does not behove any Muslim to levy a fee of 20% or even 1%. The fee is an act of zulm and is not permissible. The customer is compelled to pay it because for whatever reason, he has no need for the product and is in need of the money. Our Imaan does not permit us to resort to such exploitation.