It is vital that a retailer knows not only their obligations to shoppers but also their own rights too.
Being aware of the appropriate remedy for returns protects both the retailer and the customer.
A retailer’s rights and obligations are covered under Australian Consumer Law (ACL) found in the Competition and Consumers Act 2010. It sets out the rights consumers have granted to them automatically upon purchasing an item from an Australian business.
These rights are called ‘consumer guarantees’ and apply to new, second-hand, on-sale and online items. These guarantees are in place to offer customers remedies if there is a problem with anything they’ve purchased.
Firstly, it’s important for retailers to know that, unless there is a breach of a consumer guarantee, there are no legal grounds for return. These include:
- A change of mind
- The wrong product ordered
- The product was found cheaper elsewhere
- The fault of the item was brought to the consumer’s attention prior to purchase
- Misuse of the product caused damage
- Reasonable wear and tear over time
In the case of these situations, an individual retailer may offer their own specific remedies, but are not obliged to. These scenarios are not breaches of a consumer guarantee.
However, if there is a breach of a consumer guarantee, the correct remedy will depend on whether the product has a major fault or not.
In the case of a major fault, consumers can ask for a refund or replacement.
Alternatively, they may keep it and ask for compensation for the decrease in the item’s value, resulting from the fault.
Examples of major problems include:
- If someone had known about the problem they would not have purchased the item
- The item is significantly different from the sample or description
- The item can’t do what the retailer said it can, or what the customer asked for and can’t be easily fixed
- The item is unsafe
If the problem is not major, the retailer has the opportunity to repair the item within a reasonable amount of time. Alternatively, the retailer can choose to offer a replacement or refund. If the item can’t be repaired in a reasonable timeframe, a customer can choose a refund or replacement.
Under section 64 of the ACL, these guarantees cannot be removed or modified. Specifically, this means if something is on sale it doesn’t exclude these rights. It is illegal for a retailer to take away a consumer’s rights and hefty penalties may apply.
If you choose to have your own policies in relation to returns that aren’t a result of a fault, such as a change of mind, these should be clearly expressed to a customer prior to a purchase. This may be through clear and simple signage at the entry to a physical store. It’s within a retailer’s rights to have a sign stating you do not accept returns or replacements because of a change of mind.
Similarly, you may allow returns or replacements on the basis of a change of mind but have conditions such as a timeframe, condition of item and specific proof of purchase (e.g. receipt). This is also within a retailer’s rights. It is, however, illegal to have a ‘no refunds’ sign and/or a sign that reads ‘no refunds if purchased on sale’ as it contradicts the consumer guarantees.
While getting your head around your rights and obligations as a retailer can be tricky, a little preparation now can mean a world of difference in the long run.
Russell Zimmerman
Russell Zimmerman is executive director of the Australian Retailers Association.