ACCC cracks down on misleading refund policies — Brown Wright Stein Lawyers | Sydney Lawyers - Tax Specialist Lawyers, Corporate & Commercial Lawyers..

Earlier this year, the ACCC conducted a sweep of more than 2,000 Australian retail websites and found that some businesses had return policies and website terms and conditions that potentially contravened the law.

The ACCC issued several warnings to businesses to change their policies, terms and conditions.

Relevant law

Under schedule 2 of the Competition and Consumer Act 2010: the Australian Consumer Law (ACL), there are certain consumer guarantees that apply to businesses in providing products, including that:

goods are of acceptable quality;
goods are fit for purpose; and
goods correspond with their description.

Under section 259 of the ACL, consumers are entitled to remedies including repair, refunds and replacements if a consumer guarantee is breached. The type of remedy, and who can decide on the remedy, depends on the nature of the breach. Under sections 18 and 29 of the ACL, a statement suggesting that these entitlements do not exist such as 'no refunds', could be false or misleading and result in monetary penalties for businesses.

ACCC findings

The potential false or misleading statements found by the ACCC when reviewing the websites included:

imposing time-limits for returning a faulty product;
imposing blanket 'no refund' conditions on sales or specialised items;
referring to manufacturer warranties as the only avenue for consumers to claim remedies for faulty goods; and
placing restrictions on a consumer's right to a remedy, including stating that delivery fees paid for faulty items were non-refundable and charging restocking fees if a customer returned faulty items.

Several businesses were issued warning letters from the ACCC, urging them to update their terms and conditions to comply with the legislation. In addition to these warnings, the ACCC has cracked down on misleading or deceptive conduct over the past year including in February 2024, where Mazda Australia Pty Ltd was ordered to pay $11.5 million in penalties for making false or misleading statements about consumer guarantees.

Next steps

Businesses should regularly review their supply terms, conditions and policies to ensure they comply with the law.

If you, or one of your clients, would like help with reviewing your supply terms, conditions and policies, or have been contacted by the ACCC, please contact us.

The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.