No refunds or exchanges on sale items. No refund or exchange after 14 days from the date of purchase. How many times have we seen these signs or read that notice in stores and had a slight moment of panic? Under the Australian Consumer Law (ACL), these types of policies are unlawful and yet many retailers try to contract out of their obligations by creating their own refund policy.

The latest retailer to find itself in hot water is fashion label Sportscraft, who the Australian Competition & Consumer Commission fined $21,600 for misleading representations about consumer guarantees in its returns policy.

So how do consumers know whether the policy contravenes the ACL? Consumers often accept store policies on face value, but it is important to understand your rights for those situations where the policy is unlawful.

What are Consumer Guarantees?

The ACL contains the consumer guarantees which warrant that the goods sold are of acceptable quality, have no faults, and fit for the specified purpose. Businesses selling goods provide these guarantees by default. If goods are found to be faulty or in breach of other consumer guarantees, consumers are entitled to a refund from the business.

What Were the Misleading Representations?

The ACCC issued Sportscraft two infringement notices since January this year.

  1. Sportscraft’s receipts stated “No returns or exchanges on faulty goods purchased at a Clearance Store. There are no refunds or exchanges on samples even if the items are damaged or faulty. “
  2. The second term that raised concern was Sportscraft stating on its website that they would not allow a refund, exchange or credit more than 21 days from purchase.

Refunds and Exchange for Faulty Goods

Since consumer guarantees assure consumers that the item works as it should, a faulty good would give rise to a remedy. Sportscraft’s condition specifically attempted to contract out of this requirement by differentiating the products purchased at the Clearance Store.

An instance where a business is not required to refund or exchange faulty goods is where retailer discloses the fault or damage to the item to the consumer at the time of purchase. For example, a blouse with a missing button may be sold for slightly less than its regular price.

21-Day Time Limit

Under the ACL, there is no time limit for consumer guarantees. Businesses may offer a separate warranty on the products or services which typically have a set time. A consumer guarantee, however, may continue to apply even after the warranty period has expired.

Sportscraft’s 21-day time limit meant that they would not refund or exchange goods after 21 days from the purchase date. Consumer guarantees do not have a time limit, and the consumer can claim a remedy if necessary beyond 21 days. Although the consumer benefits from bringing the item back sooner rather than later if there is a valid reason for doing so.

Clearance Store, Online, In-Store, Secondhand – It Makes No Difference!

Not only did Sportscraft’s policy of not refunding faulty goods and limiting returns to three weeks contravene the ACL, but they also specified that the policy only applied to goods bought at the Clearance Store. It is not uncommon for stores to limit refunds or exchanges to full price items, but under the ACL, the consumer guarantees apply to secondhand goods and sale items as well. There are exceptions to consumer guarantees, but a purchase at a clearance store or a sale item is not one of them.

Change of Mind

Many retailers do offer a refund or exchange for change of mind, but it is important to note that they are not required to do this. Change of mind refunds are an exception to consumer guarantees, and refunds and exchanges are not mandatory.

Key Takeaways

Sportscraft has now amended its refund policy so that returns are allowed for outlet clearance store items, just as if the item was purchased online or in store. In light of this recent case, the ACCC is recommending retailers check their refund policies to make sure that it is compliant with the ACL. On the other hand, consumers should be aware of their rights and the consumer guarantees to which they are entitled. Questions? Get in touch with our consumer lawyers on 1300 544 755.

Dhanu Eliezer

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