There are multiple reasons why customers return goods that they have bought. Sometimes the goods are faulty, the customer has changed their mind, or purchased the wrong item, or maybe the product description was different.

Under Australia’s Consumer Law, a customer has a right to return a product and be remedied accordingly. In other circumstances, the customer can’t refund the goods, but it is ultimately up to the store owner’s exercising their discretion as to how they will respond.

This article looks at refunds and the circumstances under which the customer has a right to return a product.

When a Customer Has the Right to Return a Product

The Australian Consumer Law (ACL) outlines some consumer guarantees, which your business automatically provides to customers. It protects the customers if the products they buy do not function as expected.

If your products do not meet these consumer guarantees, your business may have to:

  • Provide a refund, 
  • Conduct repairs, 
  • Offer a replacement, or 
  • Provide compensation to the customer. 

These remedies vary depending on whether the issue with the product is considered major or minor.

What Are ‘Major’ Problems?

A major problem with a product gives the customer a right to return the product and seek a remedy. The following situations are considered major problems:

  • The product differs significantly from the description or sample product;
  • A reasonable customer would not have bought the product if they know about the problem;
  • The product doesn’t do what the customer was told it would, or what it is supposed to do, and it cannot be fixed quickly or easily;
  • The product is unsafe.

If there is a major problem with a product, then the customer has the choice of:

  • Returning the product and getting a refund or replacement; or 
  • Keeping the product and asking you to compensate for the reduced value.

What are ‘Minor’ Problems?

In short, a minor problem is fixable. Customers should give businesses an opportunity to fix the problem within a reasonable time, and you can choose whether you want to refund, repair or replace the item.

When a Customer Does Not Have the Right to Return a Product

There are situations where a customer does not have the right to return a product, but you are still able to offer a refund or exchange. You are not required to accept a return of the product if the customer: 

  • Changes his or her mind; 
  • Orders or buys the wrong product;
  • Finds a cheaper or better product at another store;
  • Is aware of the fault before buying the product;
  • Damages the product because he or she misused the product; or 
  • The product experiences general wear and tear.  

Conclusion

Your business can refund, exchange or offer store credit to the customer, but you are not required to.  Some businesses in addition to the ACL have their own refund policies. If this is the case, make sure that you stick to them!

Questions? Get in touch with LegalVision’s experienced consumer lawyers on 1300 544 755. 

Dhanu Eliezer

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