- Posted by DLA Piper Retail Thera-IP Team
- On 24 January 2019
There’s always that one present under the tree. It doesn’t quite fit right or maybe doesn’t work once plugged in…Remember to not only remain calm, but both consumers and retailers should also ensure that they are fully aware of their rights and obligations under the Australian Consumer Law (ACL).
According to the ACCC website, the Australian competition watchdog received nearly 34,000 contacts about consumer guarantee related issues in 2018 alone – an increase of more than 17 per cent compared to 2017. This article will outline both the rights of consumers and obligations of businesses when dealing with the return of goods and services.
Consumer guarantees are consumer rights that the ACL automatically attaches to any purchases of goods or services made by consumers. Such guarantees apply to purchased products and services, gifts with proof of purchase, sale items and online products and services purchased from Australian businesses.
Under the ACL, there are consumer guarantees that goods and services purchased:
- are of acceptable quality, that is, the product is fit for its purpose that the supplier represents, acceptable in appearance and free from defects – taking into account what would normally be expected for the type of product and amount paid; and
- must correspond with their description, sample or demonstration model.
Further, manufacturers must take reasonable action to ensure that repair facilities for damaged goods are made reasonably available to the consumer after the goods are purchased
When Consumer Guarantees Do Not Apply
While the ACL protects the consumer’s rights, it also seeks to uphold interests of retailers. Consumer guarantees are not applicable in instances where a consumer:
- simply changed their mind;
- found a cheaper alternative elsewhere after purchase;
- misused the product in any way which caused the problem complained about;
- knew of or were made aware of the faults before purchasing the product; or
- was unclear in communicating to the businesses about the service they wanted.
Know the Remedies
If a seller breaches a consumer guarantee, a consumer has the right to a remedy. ACCC Acting Chair Roger Featherston simply puts it as, “consumer guarantee rights mean you’re entitled to a remedy, either a repair, replacement or refund. If the problem is minor, the retailer who sold the item can choose the remedy. If the problem is major, you get to choose your remedy.”
If the problem with a product or service is minor and the business offers a free repair of the good, consumers must accept their offer. Only when a business fails to give consumers a free repair within a reasonable time, or cannot fix the fault, can consumers:
- seek repairs elsewhere and forward the costs to the business;
- ask for a replacement;
- ask for a refund; or
- recover compensation for a drop in value below the price paid.
Businesses should be aware of their responsibility to provide consumers with written ‘repair notices’, before accepting the goods for repair, when:
- the goods being repaired are capable of retaining user-generated data, such as mobile phones, computers, portable music players and other similar electronic goods; and
- it is the repairer’s practice to supply refurbished goods rather than repair defective goods, or to use refurbished parts in the repair of defective goods.
Replacement and Refunds
Consumers may request a replacement or refund where the problem with the product is major; that is, it:
- has a problem that would have prevented a consumer from buying it if they were aware of it;
- is significantly different from the sample or description;
- is substantially unfit for its purpose and cannot be fixed within a reasonable time; or
- is unsafe.
Businesses may choose to consider the duration of time since a product has been purchased when determining whether it is reasonable for a consumer to bring forward such a complaint.
In relation to services, the problem is major when:
- it has a problem that would have prevented someone from buying it had they known of it;
- it is substantially unfit for its common purpose, or does not meet the specific purpose the consumer asked for, and can’t easily be fixed within a reasonable time; or
- it creates an unsafe situation.
‘No Refund’ signage
We’ve all seen them at least once: ‘No Refund’ signs. Retailers and consumers should be aware of the fact that, under the ACL, it is prohibited for a business to tell customers that they do not give refunds under any circumstances, including for gifts and during sales. Consumer guarantees do not have specific expiry dates and may still apply even after warranties from the business have expired.
To avoid reputational damage, a company’s return and refund policy should be clearly displayed on their website and in-store. Further, to reduce the risk of misleading consumers, businesses should ensure that their staff are made aware of their obligations as a retailer. In October 2017, the Federal Court of Australia ordered that three related retail businesses pay fines totalling $750,000 for deliberately misrepresenting consumers on their rights to repairs, replacements, and refunds.
If you are a retailer, remember:
- Retailers have a duty under the ACL to ensure the goods they provide to consumers are of acceptable quality and are fit for purpose.
- A retailer must ensure that a description, sample or demonstration model of the product being sold is an accurate representation of the product.
- Businesses are under no obligation to uphold the consumer guarantees when a customer simply changes their mind, causes the damage to the good complained of, or is aware of the fault before purchase.
- Businesses must not display signs stating they do not offer refunds to consumers under any circumstances, including for gifts and purchases during sales.
- If the product complained of by a consumer is found not to have a problem, the consumer may be required to pay transport or inspection costs.
If you are a consumer, remember:
- Consumers have a prescribed list of guarantees for goods and services purchased, including being of acceptable quality, fit for purpose, and matching their description, sample or demonstration model.
- When a fault with a good is minor, a consumer must accept a business’ offer of a free repair, rather than seeking other remedies.
- Conversely, when a good has a major fault, the consumer has the right to request for a replacement or refund as an appropriate remedy.
- The consumer is responsible for returning the product if it can be posted or easily returned, and is entitled to recover reasonable postage or transportation costs from the business if the product is confirmed to have a problem.
- Consumers do not need to return products in the original packaging in order to receive a refund.
This article was co-authored by Matthew Rozario, Josephine Gardiner, Lucy Meadley, Jessie Buchan and Melinda Upton.