What are the rules around providing refunds to customers? Contractor solicitor series – article 1

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Table of Contents

• When are repairs more appropriate?
• What are repair notices?
• When is replacing or refunding more appropriate?
• When is the problem ‘major’?
• Do I return the product?
• Who do I approach, the retailer or manufacturer?
• Are ‘No refund’ signs legal?
• Conclusion

As a consumer in Australia and according to the Australian Consumer Law, you normally have the right to request a repair, a replacement or a refund of any product/service purchased after 1 January 2011. When in doubt, a contract solicitor can assist you in determining your rights.

As a consumer, having your product replaced, repaired or refunded is not always your right. For instance, if you have had a change of heart at the last minute, but got exactly what you paid for, it will be almost impossible to enforce this right. This can happen if you have found the same, or a similar product for a more affordable price, or, alternatively, you have decided that you no longer require the product itself. Unfortunately, in these cases you would not be entitled to your consumer guarantees.

If the product/service has a minor defect or issue, the business may offer to repair the product/service in lieu of a replacement or refund. If, however, the problem with the product is not minor, you retain the right to elect a refund or a replacement. For a service, you can either be compensated for any value decrease in the price paid, or be fully refunded. If you’re a business owner, a contract solicitor can advise you on when a refund is most appropriate.

When are repairs more appropriate?

When the defect of the product/service is minor, and the seller agrees to repair the product/service, you have to accept this offer. If the seller does not offer to repair in a reasonably timely manner or elects not to address the issue at all, you have several options. You could have it repaired by a different business and then claim these costs from the original seller, have it replace or refunded, or be compensated for the decreased value below the retail purchase price. If you were seeking a refund on a large number of defective items, the advice of a contract solicitor would greatly assist on how best to proceed.

What are repair notices?

Any business that offers to fix a faulty product is required, pursuant to Australian Consumer Law, to give the purchaser a notice of the repairs if:

• The products in need of repair can hold ‘user-generated data’, such as electronic goods like mobiles and computers.
• It is normal procedure for the business to offer repaired goods instead of fixing the faulty product

Before the seller accepts the products that are in need of repair, you, as the purchaser, must get this notice of repair in writing. If you are being denied this notice of repair, seek the advice of a contract solicitor.

When is replacing or refunding more appropriate?

If the problem is not a minor defect, but rather something more substantial, you are within your rights as a consumer to request a replacement or a refund of the faulty product. The replacement must be of the same product that you bought in first place. If you elect to be refunded, it must come in the same form (cash, credit card, etc) in which the product was originally purchased.

When deciding whether to grant you a refund or replacement of the product, the business is allowed to consider the amount of time that has elapsed since you purchased the product. They can consider the following in their assessment:

• What was the product?
• How would a consumer normally use this product?
• The amount of time for which it could reasonably be used
• The manner and amount of use that the product could reasonably be expected to withstand before failing

In terms of issues that arise with services, you may seek to end the contract and be refunded or be compensated for the decrease in value of the service in comparison to what you paid. If you’re not sure, it is worth checking with a qualified contract solicitor for guidance.

When is the problem ‘major’?

The problem is ‘major’ when any of the following occur:

• Its defect would have prevented someone from purchasing the product.
• It’s dangerous.
• It simply doesn’t match the product description.
• It lacks the functionality it should have.

A service, on the other hand, is similarly defective if:

• A consumer wouldn’t have purchased the service had they known about its problem.
• The main purpose of the service cannot be achieved, and can’t be amended within a fair and reasonable timeframe.
• It doesn’t satisfy the purpose for which you requested it.
• It could be dangerous to provide.

Do I return the product?

You are meant to return what you purchased, except when you will incur significant costs in doing so. If this is the case, the seller is required to arrange payment to return the item to have it refunded or exchanged.

A contract solicitor would advise you that the law does not require you to have the product(s) returned in their original packaging in order for them to be refunded.

Who do I approach, the retailer or manufacturer?

The shop where you originally bought the product must assist you, and cannot simply send you to the manufacturer of the product. While you can approach the manufacturer directly, you are only going to be able to get costs (including a reduction in the value of the product), and won’t be entitled to repairs, replacement or refund. If both retailer and manufacturer send you away, consider seeking advice from a contract solicitor.

Are ‘No refund’ signs legal?

Businesses are not required to display signs stating that they give refunds, however, at the same time they must not display signs saying that they do not give refunds, even for gifts and discounted sale items.

Technically, your rights under consumer guarantees are not limited by any expiry date and can be applied after any warranty you have been given expires.

Conclusion

As a consumer, you have various rights under consumer guarantees, and depending on how defective the product is, your rights will vary. If you feel you are being unfairly denied a refund, exchange or repair, you should advise a contract solicitor of your situation.