Be Wary of ‘No Refund’ Signs, Refund Policies and Warranties

Sally Scott was interviewed on ABC’s 7.30 (formerly The 7.30 Report) on 4 January 2012 in relation to the widespread use of unlawful ‘no refund’ signs, refund policies and extended warranties.

It is important that retailers and other suppliers have these matters checked by a lawyer (with appropriate expertise in the area). The consequences for non compliance include fines of up to $1.1million for companies and $220,000 for individuals.

‘No refund’ signs

During the current sales, it was noticed that many retailers are displaying unlawful ‘no refund’ signs. Signs (and terms) which say ‘no refund/exchange’, ‘no refund/exchange on sale stock’, ‘any claim for a refund/exchange must be made within X days’ and ‘no refund/exchange without a receipt’ are unlawful. It is permissible to say ‘no refund/exchange if you are simply changing your mind’.

Refund policies

Refund policies which suggest that receipts are required for any refund/exchange, or that claims for any refund/exchange must be made within a certain number of days, are misleading because these are not requirements of claims under the Australian Consumer Law.  If retailers wants to provide additional refund/exchange rights beyond those provided under the law (for example a right for a consumer to change their mind), they may impose conditions on the additional rights. However, retailers must make it clear that those conditions only apply to the additional rights and do not apply to rights under the law. Many online refund policies checked either suggest that such conditions apply to all refund/exchange rights or do not make the distinction clear enough.

Warranties against defects

New laws came into force on 1 January 2012 in relation to warranties given by retailers concerning defects (including those contained in refund policies, labelling, advertising and other material). The new law provides that certain information and a mandatory statement must be included.

It is imperative that any document making reference to a warranty against defects be checked for compliance with the new law.

Extended warranties

It is unlawful for a retailer to attempt to sell an extended warranty by representing benefits that are already available under the Australian Consumer Law. Retailers need to have their extended warranty terms and policies checked by a lawyer and also need to ensure proper training is given to sales staff.

We view this as an important step that needs to be taken by retailers. Again, there are significant fines for non compliance.