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Refunds. When Am I Required To Refund A Customer?

Do I Need A Refund Policy?

It is recommended that businesses are transparent about when a customer is entitled to a refund or return. There are several ways in which you can communicate a refund policy, including on your website, on display in your store, or in terms and conditions.

Consumer Rights

Certain consumer rights are embedded in law and cannot be overridden by a business’s own policies. It is important to understand what those rights are, not only to ensure that you comply with the law but so that you are also aware of what you must provide a customer – as it may not necessarily be what they are asking for.

Does Consumer Law Apply To Me?

The Australian Consumer Law (ACL) applies essentially to anyone who engages in trade or commerce / sells goods or services to a consumer in Australia. It also extends to manufacturers and importers. There are different guarantees for consumers who purchase goods or use a service.

It is important for a business to understand what consumer guarantees apply; for example, manufacturing does not just refer to big business but to anyone who makes or puts goods together and extends to importers of overseas products. In addition, retail providers can also be liable for a manufacturing fault. Businesses should also be aware of the time limits that apply to consumer claims under consumer law as these can vary and can extend well beyond the 28 days commonly claimed. Consumers also have a number of ways in which they can provide ‘proof of purchase’ and no longer can a business claim ‘no receipt – no refund’.

How Do I Ensure My Refund Policy is Valid?

For a refund policy to be valid, it must be consistent with the guarantees contained in the law. Similarly, for a consumer to have a valid claim for a breach of guarantee, the consumer must be able to show that one of the consumer guarantees has been breached and claim the remedy prescribed by the law.

The consumer guarantees provided by law are general in nature and a business’ refund or returns policy should be drafted in consideration of your business operations. Managing consumer expectations about the provision of goods and services are as important as your website, advertising or promotional material is considered as part of the consumer experience being guaranteed.

Dealing with consumer complaints can be costly and time-consuming, not to mention potentially cause reputational damage to your business. However, businesses can reduce the potential for consumer complaints by understanding the rights and obligations under the ACL and by having a transparent, clear, yet detailed consumer policy that is specific to your business.

What Next?

If you’re unsure about how Australian Consumer Law applies to your business we recommend speaking with a business lawyer. For quick legal advice, you can choose a Quick Match or browser Our Lawyers.

This article is written by Karen Finch and was first published on the Legally Yours website.

This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practising lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.