What Does The Australian Consumer Law Say About Refunds?
According to the Australian Consumer Law, a customer is entitled to a refund if there is a ‘major problem’ with a product they purchased.
For a service, customers are also entitled to cancel the contract and get a refund or compensation for lost value when there is a major problem.
How Are Customers Refunded?
When customers are refunded, it will usually be in the same way they paid, for instance if they paid on their credit card, the same amount of the purchased good will go to their credit card, or if they paid in cash, they will be refunded cash.
What Factors Decide A Refund?
When deciding to give a refund, businesses can consider how long ago the product was purchased in conjunction with the type of good, how it would normally be used, how long it would be reasonable to be used, and how much reasonable use a consumer could get out of a product before the problem is apparent.
What Are ‘Major Problems’?
Major problems for goods are:
- issues with a product that would the consumer have known about would have prevented them from purchasing the good
- the product is significantly different to the description or sample
- it is not fit for the purpose it was made to serve, and cannot be repaired within a reasonable timeframe
- the product is not safe
Major problems for services are:
- issue with the service that had the consumer known about would have prevented them from purchasing the service
- not fit for purpose, this can be the purpose the consumer requested, or the common purpose of the particular service, and this can’t be addressed within a reasonable timeframe
- there are safety issues
In order to receive a refund, customers do not need to return the item in its original packaging. Consumers should ask for a refund from the retailer rather than the manufacturer.
There is no expiry date for consumer guarantees – this means a consumer might be entitled to a refund even after the warranty they received with a product has expired.
Lastly, as consumers are always entitled to a refund where there are major problems with a product or service, ‘no refund’ displays, even on sales items, is against Australian Consumer Law.
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