The Australian Competition and Consumer Commission (ACCC) recently reviewed more than 2,000 Australian retail websites to assess whether their return policies and terms and conditions complied with the Australian Consumer Law (ACL). The review uncovered several practices that could potentially mislead or deceive consumers about their rights to exchange, refund or return products.
Under the ACL, mandatory warranties apply to goods or services sold to consumers for less than $100,000 or that are typically purchased for personal, domestic or household use. It is considered misleading to suggest otherwise in refund policies.
Issues identified by the ACCC
The review identified several practices that may mislead consumers, including:
- imposing time limits for returning faulty products
- applying blanket 'no refund' conditions on sales or specialised items
- stating that consumers can only claim remedies for faulty goods through manufacturer warranties
- restricting consumer rights, such as making delivery fees for faulty items non-refundable or charging restocking fees for returned faulty products.
Some of the problematic statements flagged included:
- "Items that have been opened and used cannot be exchanged or refunded"
- "Made to order products cannot be returned"
- "Sale items cannot be returned, exchanged or refunded"
- "In the unlikely event that your item arrives damaged or faulty, please notify the store within 30 days of delivery to receive a replacement".
If any of the above sounds familiar, it may be time to review your business' terms or refund policies to avoid potential warnings from the regulator.
Recent enforcement actions taken by ACCC
The ACCC has taken enforcement action against several brands for misrepresenting consumer guarantee rights under the ACL. Last year, brands including A&S Labels Pty Ltd (trading as Tiger Mist) and Fitbit LLC faced penalties for misleading consumers about their rights to a refund or replacement for faulty or defective products.
How can businesses stay compliant?
Apart from reviewing your business' returns policy and procedures, you should also consider training employees on how to handle refund requests to ensure they do not misrepresent consumers about their rights and reviewing other product and marketing material to ensure your claims on warranties and refunds are consistent.
Holding Redlich can assist in drafting terms and conditions that comply with the law, while protecting your business from costly refund demands in situations where consumers have essentially changed their mind. We can also develop and/or deliver training to your customer service teams and review other product and marketing materials. If you would like to learn more, get in touch with our team below.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
