Businesses are failing to comply with ‘no refund’ laws

A report on the ABC’s 7:30 current affairs program has highlighted a failure by businesses to comply with refund policy requirements under the Australian Competition and Consumer Act (formerly the Trade Practices Act).

It is illegal to for businesses to state that they do not under any circumstances give refunds. Nonetheless, many retailers and other businesses use ‘no refunds’ signs during sales periods and at other times. Businesses should be aware that a sign which simply states ‘no refunds’ without any qualifying information will be considered unlawful.

The Queensland Government Office of Fair Trading has advised that the following signs are illegal:

  • no refund on sale items
  • no refunds after seven days
  • exchange, repair or credit only
  • no returns on swimwear

While businesses can refuse to refund ‘change of mind’ items or items that have been misused by the customer, it is unlawful to deny a refund where, among other things, the product is defective or the advertising has been misleading. It is also unlawful for a business to restrict customers to credit notes or other remedies of the business’s choosing, in place of a refund.

Businesses should take care to ensure they comply with the legislative requirements, and staff should be informed and trained in refund policies to ensure they make appropriate decisions and do not mislead customers.

Businesses should also be aware that extended warranties are illegal if they parallel the benefits available to customers under the Australian Consumer Law (a schedule to the Australian Competition and Consumer Act). These benefits are automatically provided by businesses and include guarantees such as goods being of acceptable quality, and services being performed with due care and skill. A warranty which ‘extends’ these guarantees will be unlawful.

If businesses do use extended warranties, it is important that customers are informed of how the extended warranties are benefiting them above and beyond their statutory rights.

For further information or assistance in relation to your business’s rights and responsibilities, please contact Certus Legal Group.