When must an online store give a refund?

Major problems

The ACCC lists what a major problem means, among them a product that is unsafe, is very different from the description or sample, or can’t be used for its normal purpose, or another purpose the consumer told the seller about before they bought it, and can’t easily be fixed within a reasonable time.

When the problem is major, the remedy is the buyer's to choose in some situations, and the money side is fixed: a refund should be the full amount the consumer paid for the product, and the business must not deduct an amount from a refund to take into account the use a consumer has had of the product. Refunds should be provided in the same form as the original payment, unless the business and consumer agree otherwise. The ACCC also notes that in some situations the consumer gets to choose the remedy they prefer, and that a business has the right to assess the product or service before it provides a remedy.

Minor problems

Below a major problem sits the minor one, and the remedy changes with it. The ACCC: when a product or service has a minor problem, the business must fix the problem or repair the product for free, and the business does not have to offer a replacement or refund for a minor problem, although it can choose to do this.

Where the business cannot or will not do the fix, the ACCC gives the consumer a set of options: get it done somewhere else, with the business paying the consumer back for the reasonable cost of the fix or repair; or get a refund or replacement instead; or keep the product or cancel the service contract, and be compensated for the drop in value caused by the problem.

Change of mind

Where nothing is wrong with the product, the position is the opposite of a guarantee. Consumer Affairs Victoria: Generally, a store does not have to give a refund or replacement if a customer simply changes their mind about a product. The ACCC's list of what a change of mind covers: the customer got what they asked for but simply changed their mind, found the product cheaper somewhere else, or decided they didn't like the purchase or had no use for it.

But a policy changes the picture, and binds the store to it: if a business has a change of mind policy, they must follow it. Consumer Affairs Victoria's version: some stores and chains have an in-store policy to offer a refund, exchange or credit note if a customer changes their mind, and if so the policy should be clearly displayed at the point of sale or included on the business' website, if it has one, so customers can read it before buying. Stores that have such policies must abide by them, and the policy cannot take away the customer's rights under the Australian Consumer Law.

Side by side

The three states of a sale, side by side, each cell in its source's words:

Where the product has to come back, the ACCC sets the costs: consumers are responsible for returning products that can be posted or easily returned; if the business confirms that the product does have a problem, it must reimburse the consumer for any reasonable return costs they have already paid; and if the business finds that the product does not have a problem, it can make the consumer pay the collection and inspection costs, but to do this it must give the consumer a reasonable estimate of these costs before collecting the product.

Your store's refund policy

A policy is allowed; a right cannot be signed away. Consumer Affairs Victoria: generally, consumers have a right to a refund when there is a major problem with something they bought, and stores cannot take away this right by claiming they have a no refund policy or displaying a no refund sign. That extends to a website: this also applies to an online store's refunds and returns policy.

And where a store has no change of mind policy at all, the baseline is the guarantee: if a store does not have a change of mind policy, the customer is only entitled to a refund or replacement for a major problem with a product covered by consumer guarantees.

Signs and website wording

The sign rule, and its online translation. Consumer Affairs Victoria: signs that state no refunds are unlawful, because they imply it is not possible to get a refund under any circumstance, even when there is a problem with the goods or service, like a defect or lack of due care and skill. A narrower sign is acceptable: signs that state that no refunds will be given if you have simply changed your mind are acceptable. And the ACCC makes the same finding for a policy as for a sign: it is illegal for businesses to rely on store policies or terms and conditions which deny these rights, for example policies which say no refunds or no refunds or exchanges on sale items.

Read onto a store's own website, the rule bites in three places: the refunds and returns policy, which cannot deny the guarantee rights ; any no refunds wording, which is unlawful as a blanket statement ; and the change of mind line, which the store's own policy decides. Consumer Affairs Victoria says that policy should be clearly displayed, or on the website, so buyers can read it before buying .

Proof of purchase

When a refund is requested, a store may ask for proof that the item was bought there. The ACCC: if a consumer requests a repair, replacement or refund, the business can ask for a receipt or another form of proof of purchase, and the law doesn't give a definition of how much proof is enough, because the consumer just needs to reasonably demonstrate that they bought the item. The consumer can provide original documents, photos or photocopies.