Find out more about the remedies you need to offer by using the ACCC’s Repair, replace, refund problem solver. By answering the questions, based on the situation you’re in, the tool will guide you on what you will need to do under the ACL.
Having a clear returns policy for your business can save you time and money, while also creating an opportunity to highlight your focus on customer service.
To avoid confusion, familiarise yourself with Australian Consumer Law (ACL), display your refund policy to inform customers, and have a clear process in place to handle customers returning goods.
Under ACL, if an item is being returned simply because the customer has changed their mind or a gift-recipient doesn’t like the colour, refunding or exchanging the item is at your discretion. You may wish to put a time-limit on ‘change of mind’ returns, for example 30 days, and you can choose to replace the item, refund their money or issue a credit note.
However, if the item is broken, unsafe or doesn’t do what it’s meant to do, you have an obligation to refund, repair or exchange it. The ACL has clear guidelines on guarantees, warranties and refund policies, so be sure you have the facts.
What you need to know under the ACL
- Displaying a ‘no refund’ sign is against Australian Consumer Law. (Even saying ‘no refund on sale items’ is not allowed.)
- If the product is not of acceptable quality and needs repairs, you can’t charge the customer to fix it, nor can you simply refer the customer to the manufacturer.
- If the fault is major, you should offer to refund or replace the item, rather than repair it.
- If the item is bulky, you should pay for its return transportation.
- If you’re repairing or replacing the item, you must tell the customer if a replacement is second-hand or refurbished with used parts.
- Repairs must be completed within a reasonable time.
- Items don’t have to be returned in the original packaging and if the customer has lost the receipt, proof of purchase by a credit card statement, confirmation or receipt number from an internet or phone transaction should still be accepted.
- Consumers have a right to alter the agreement with a service provider when a service has a major problem.
For more information, see the Australian Competition and Consumer Commission’s Warranties and refunds – a guide for consumers and business.
Tip
Using returns and refunds as customer service opportunities
While the ACL allows you to decide if your business will accept returns or refunds for change of mind, these situations can present a valuable opportunity to showcase exceptional customer service.
By exceeding the minimum requirements under the ACL, you can:
- Build trust: Going beyond what's mandatory demonstrates a commitment to customer satisfaction, fostering trust and loyalty.
- Enhance your reputation: Positive customer experiences, especially in return situations, can contribute to a positive reputation, potentially leading to word-of-mouth referrals.
- Gain a competitive advantage: Exceptional service sets your business apart, providing a competitive edge in a crowded market.
- Retain customers: Satisfied customers are more likely to return. Turning a 'change of mind' return into a positive experience can lead to repeat business.
- Attract positive reviews: Happy customers are more inclined to share positive reviews, boosting your online presence.
Treating returns as opportunities rather than obligations can elevate the overall customer experience and contribute to long-term business success.
Tip
A business can be considered a consumer too. Products and services bought for business use are covered by consumer guarantees, if:
- they cost less than $100,000 including GST
- they are not bought to be re-sold or used in production or manufacturing.
Business vehicles and trailers are covered by consumer guarantees if they are used mainly to transport goods on public roads, no matter what they cost.
