Your returns policy can help your customers feel safe and confident in their purchase. However, your returns policy must comply with Australian Consumer Law, otherwise you could risk infringement notices and penalties from the ACCC. In this article, we look at when customers are entitled to refunds, what consumer guarantees are, and how they affect your returns policy.
When do you have to refund a customer?
If your goods or services don’t meet a consumer guarantee, then the customer is entitled to a remedy. This can be a refund, a repair or replacement, or compensation for the unfulfilled consumer guarantee. For small problems, you can choose the remedy. For major issues, the customer has the right to choose. Depending on the type of good/service, different consumer guarantees apply. See below for more details about what consumer guarantees are.
If a customer only changes their mind about your goods or services (e.g. not due to your fault or a manufacturing fault), they are not automatically entitled to a refund. However, your refund policy can still support change-of-mind returns. If you choose to do so, you must abide by your policy.
What are consumer guarantees?
In your business, you owe your customer guarantees about the goods or services you sell. There are different consumer guarantees that you must follow, depending on the kind of goods or services you provide.
You cannot refuse or limit these guarantees in your returns policy—they apply automatically, so it is crucial to know the expectations set out by the Australian Consumer Law!
If you provide goods:
For goods that are less than $40,000, or are normally for personal or domestic use, then the consumer guarantees include:
- That you have a right to sell
- That the goods are of an acceptable quality
- That descriptions in advertising are accurate
- That the goods are equal to any samples or demonstrations given
- That express warranties of the goods are met
- That the goods are fit for the purpose you specify
- That the consumer is not prevented at any time from possessing or using the goods
- That there are no hidden fees with the goods
- That you can take reasonable steps provide spare parts and repair facilities
For example, if you sell clothing and it is described to be made of wool, but the actual piece of clothing is synthetic then the customer would be entitled to a refund. You may also be at risk of breaching other consumer laws such as misleading or deceptive conduct. It is important to ensure your products are correctly described!
If you provide services:
For services that are less than $40,000, or are normally for personal or domestic use, then the consumer guarantees include:
- That the services are provided with due care and skill
- That the services are fit for the purpose you specify
- That the services happen within a reasonable time, if no time is set
For example, if you have a lawn mowing service and you miss a large part of the garden, then the customer would be entitled to you either fixing the issue at your cost or providing a refund or other remedy.
What to do?
The consumer guarantees above cannot be avoided with returns policies that counter or restrict these rights. For example, for faulty products, you cannot put a deadline on the return or require original packaging. In fact, including terms that attempt to restrict these rights are a breach of law themselves!
The standards of the consumer guarantees depend on the goods or services you provide. Because of this, writing a returns policy that complies with the Australian Consumer Law can sometimes be confusing. For help with your returns policy, contact us for a free, no-obligation chat.
