Selling products online – refund and returns policy essentials

Do you sell products online? If you sell to “consumers” under the Australian Consumer Law, then the Australian Consumer Law applies, and you need to comply with the requirements.

Refund and Return Policy and the Australian Consumer Law

Is your Refund and Return Policy in accordance with the Australian Consumer Law?  It can be a stand-alone policy or part of your Sales Terms and Conditions.

When you sell goods, those goods come with guarantees which cannot be excluded under the Australian Consumer Law.  You need to know what consumer guarantees you must comply with. Your Sales Terms and Conditions should not limits or excludes any guarantees that are imposed by the Australian Consumer Law.

Consumer Guarantees

From 1 January 2012, all guarantees against defects on consumer goods must include the following statement:

“Our goods come with warranties and guarantees that cannot be excluded under the Australian Consumer Law (Consumer Guarantees). You are entitled to a replacement or a refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.”

This does not mean that you have to refund every customer that comes back to you claiming that you provided them with a faulty or defective good.

For all customers who wish to return goods and are seeking a refund or replacement, you can require that evidence of the faulty good is provided.  Standard practice requires the customer to return the good to you.  You can then inspect it and assess whether it is eligible for a refund.

You are not obliged to refund or replace any goods which have been used, connected, or installed, unless they have major faults.

Sales Terms and Conditions

Your Sales Terms and Conditions can state that you will not accept any sale or customized goods for return, unless they have major faults.

You can request that customers adequately package any goods that they wish to return to ensure that it is not damaged during return delivery.

Well-drafted Sales Terms and Conditions will include that title to the goods will not pass until full payment is received, but risk passes on delivery. Therefore, the customer has a duty of care for the goods in their possession.

Your Sales Terms and Conditions should note that some goods come with a manufacturer’s warranty. This warranty is in addition to any rights and remedies that the customer has under the Australian Consumer Law. For customers who do not fall within the definition of a “consumer” under the Australian Consumer Law, the manufacturer’s warranty may be the sole remedy. You can direct those customers to contact the manufacturer directly to make their claim.

Conclusion

If you are setting up an online shop, it is highly recommended that you draft the Sales Terms and Conditions with the assistance of a business lawyer. Amongst other things, your lawyer will help ensure that your returns and refund policy aligns with the Consumer Guarantees under the Australian Consumer Law, and that your interests are well-protected.