‘No refunds’ – says who! Get to know your rights

Posted on March 04, 2022
Rebecca Cameron

As consumers, and especially with the increase in online shopping, most of us have purchased a product that doesn’t work or doesn’t do what you expected it to. So, do you have a right to a refund, and if you do, what if the seller tells you otherwise?

We’ve all seen the sign above the cash register which states “no refunds”. However, despite what a seller may lead you to believe, you have the right to a repair, replacement, or refund under the Australian Consumer Law (ACL) if a product or service you buy fails to meet a consumer guarantee.

Consumer guarantees are automatic rights under the ACL which ensure that products or services will work, they work as described, and will be safe. If these guarantees are not met, you are entitled to exercise your rights.

Under the ACL, consumers have a right to refund or replacement (at no cost) when there is a major failure. A major failure exists when a product is not fit for purpose, cannot be fixed within a reasonable time, or is unsafe.

This differs from minor defects, for which there are still remedies, although more limited than a major defect.

What if a seller says I am not entitled to a refund?

Sellers who attempt to mislead consumers about their rights under the ACL may face penalties for making false and misleading representations about consumer guarantees. 

In the recent case of ACCC v Mazda Australia Pty Ltd [2021] FCA 1493 (ACCC v Mazda), nine Mazda customers experienced serious and recurring faults in their new vehicles. The faults constituted a major failure and the customers requested a refund or replacement from Mazda. Contrary to consumer guarantees associated with a failure of this kind, Mazda advised customers they were only entitled to have their vehicles repaired, and not replaced or any refund given. The Federal Court disagreed and found that Mazda’s representations were false and mislead customers about their entitlements under the ACL.

Consumer guarantee rights apply for a reasonable period and no business can attempt to exclude, limit, or modify these rights, even if their terms and conditions purport to do so.

What if a seller says that I must pay for my replacement or repair?

The Federal Court in ACCC v Mazda also ruled on this issue, finding that consumers do not have to pay any costs or make financial contributions to obtain remedies under the ACL.

Key Takeaways

The message to sellers is clear, consumer rights are not negotiable and must not be misrepresented to consumers. For consumers, it is important to remain vigilant about your consumer guarantees, especially when goods or services have a major failure which entitles you to repair, refund or replacement. In the event that a seller fails to comply with the ACL, you should seek advice as soon as possible to enforce your rights.