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Refunds and warranties

Refunds

When you must offer a refund

Customers have the right to a repair, replacement or refund if the goods supplied:

have a fault that the customer could not have known about at the time of purchase
do not do the job that the customer was told they would
do not match the sample shown to the customer
are different than described in the advertisement or by your staff.

Customers can ask for a full refund, partial refund or a repeat service at no charge (depending on the circumstances) if a service:

is not an acceptable ‘saleable’ standard
is different than described in the advertisement or by your staff
does not match the demonstration shown at the time of purchase
does not do the job or perform to the standard that the customer was told it would.

In these circumstance, the customer has the right to insist on a refund instead of a repair, exchange or credit note.

When you don’t have to offer a refund

You don’t have to provide a refund if the customer:

simply changes their mind or no longer wants the goods or service
realises they can’t afford the goods or service
found the same item or service at a cheaper price elsewhere
chose the wrong size, colour or type of service
knew about the particular fault before buying it
was responsible for causing a fault or damage after purchase
insisted on the service being done despite warnings it may not meet their needs
does not offer proof of purchase, such as receipt, a witness to the purchase or a purchase shown on a bank statement
took action that voided or damaged the outcomes provided by the service.

If a customer used the goods for a reasonable time, they are only entitled to a partial refund or repair.

Many businesses offer a refund regardless of the legislation to build goodwill and increase customer loyalty.

The customer’s obligations

If a customer asks for a refund, they should:

report the fault and return the goods within a reasonable time
provide details of the fault
provide proof of purchase
stop using the faulty goods until they return them
look after the goods until they return them.

If a customer does not return goods within a reasonable time after the date of purchase, they can ask for a repair or a replacement but not a cash refund.

If a customer bought on credit, they cannot get a cash refund. They can ask you to refund the deposit or payments they have made, as well as cancel the outstanding balance, or they can ask for credit to the value of the items they returned.

Displaying your refund policy

Businesses do not have to display refund signs. However, if your business does, the signs must not be misleading.

Signs that say ‘No refund’ are illegal.

The following refund signs or contract terms are illegal, as they imply that customers are not entitled to a refund or that the consumer has no rights if the goods are faulty in any way:

no refund on sale items
no refunds after 7 days
exchange, repair or credit only
no returns on swimwear.

The recommended refund sign for use by businesses reads:

Refund policy
Please choose carefully. We do not normally give refunds if you simply change your mind or make a wrong selection. You can choose between a refund, exchange or credit where goods are faulty, wrongly described, different from a sample shown to you or don’t do what they are supposed to do.

Make sure all your staff fully understand your refunds policy so they can answer questions and make appropriate decisions regarding refunds.

Statutory warranties

Your obligations

When providing goods and services you must ensure:

the consumer owns the goods outright once purchased
the product is suitable for the purpose you are selling it
the product is not faulty
the product performs to an appropriate standard and achieves the requested result
your samples match the supplied product
services are carried out with due care and skill.

The customer’s obligations

To be eligible for a warranty replacement, the customer must ensure the goods are not:

damaged by being used in an abnormal way or being neglected
disposed of, lost or destroyed
reduced in value by delaying their return.

A customer does not need to:

return goods in their original packaging
return the manufacturer’s warranty card or notice provided with the goods.

Limiting liability

You cannot limit your liability by excluding, modifying or restricting the legal rights and remedies available to customers. If you attempt to alter these legal rights, you can be prosecuted for making false or misleading statements.

If a customer returns a faulty item that you sold, you as the supplier or retailer share the liability for the problem with the manufacturer. But, ultimately, it is your responsibility to resolve the complaint.

If you need to give a refund on goods with a design or manufacturing fault, you can seek compensation from the manufacturer or importer.

Advice to customers about caring for receipts

The Office of Fair Trading is aware some consumers have concerns about retail receipts fading rapidly therefore making it difficult to prove a purchase at a later date. The issue appears to be associated with the use of thermal printers. These printers use thermal reactive paper which develops the print when it passes over a thermal print head. Over a period of time, some types of receipt paper do not react favourably when stored near heat, light, abrasives or with plastics. As technology advances, the paper and printing methods used for receipt purposes is likely to improve and traders may consider sourcing and using superior quality receipt paper if economically viable.

Traders are under no obligation to inform consumers on how to care for receipts. However, to encourage good business practices and amiable consumer trader relationships, traders may wish to provide helpful advice to consumers on how to care for their receipts by storing them in a dark, cool non plastic environment or by taking a photocopy of receipts to ensure legibility.

Last reviewed 10/09/2009