Retailers urged to drop illegal “no refunds” signs this Christmas

Retailers are being warned against displaying unlawful “no refunds” signs in their stores as the Boxing Day sales period approaches.

Business law practitioners at LegalVision are reminding retailers that under Australian Consumer Law, customers are entitled to a refund, repair or exchange if an item is damaged or not fit for purpose. Businesses cannot set their own policies that restrict these rights, and signs that read “no refunds” or “no refunds on sale items” could breach the law.

Consumer guarantees apply to an individual or business if they purchase goods worth less than $40,000. If a product is sold and does not meet the minimum standards of quality, a business is required to work with the customer to resolve it. If there’s a minor problem with the product, the retailer is able to decide whether a replacement, repair or refund is most appropriate, but if the problem is major, that choice is up to the consumer.

Major problems include if the product is dangerous; significantly different from what is described; doesn’t have the functionality it should; or has a defect that would stop someone else from purchasing it.

Over the past five years a number of high-profile retailers have been the spotlight over claims they misrepresented a customer’s right to a refund, including Sportscraft and Harvey Norman franchises.

“Consumer guarantees remain a priority area for the ACCC. It is concerning that we’ve seen a number of similar complaints in the fashion industry of late,” ACCC commissioner Sarah Court said in a statement after Sportscraft was fined $21,000 earlier this year for making claims on tax receipts that faulty goods could not be returned if bought from clearance stores.  

Be clear on policies this festive season

According to the team at LegalVision, if there is a major fault in a product, a customer does not have to return the item in its original packaging.

However, if a retailer is offering a discount on damaged floor stock, the law might not apply if the shopper knows about the defect before buying, with lawyers telling customers that if they are aware of a fault before purchase, there might not be much they can do.

“It’s relatively common for retailers to offer discounts on damaged floor stock. But if you’re made aware of the defect before purchasing the product, it’s unlikely that you’ll be saved by the Australian Consumer Law if you change your mind about the purchase,” says Thomas Kaldor, lawyer at LegalVision.

The Australian Competition and Consumer Commission outlines the rights and responsibilities of consumers and businesses, reminding retailers that they are legally obliged to deal with customer complaints about products.

To comply with the law, the ACCC states a business should not:

• Display signs that read “no refunds”, “no refunds on sale items” or “Exchange or credit note only for the return of sale items”;
• Tell consumers they should contact the manufacturer for assistance with a faulty product—the seller must deal with the issue if approached; or
• Make suggestions that the consumer guarantees on offer only stand for the warranty period on a product—the law applies regardless of any warranties.

If a part of consumer law has not been breached, however, a business is not required to provide a remedy. While some stores voluntarily offer change of mind returns within a certain time period, this is not required by law, according to the ACCC.

The commission also advises that if a customer has discovered they can buy the product cheaper elsewhere and wants to return it, or has used it unreasonably in a way that has caused damage, the business may not need to provide a remedy.