When do you need to accept returns under the Australian Consumer Law?
17 December, 2024
The post-Christmas period often sees an influx of customers returning goods, and as a small business owner, it’s essential to understand your obligations under Australian Consumer Law (ACL). Here’s a guide to help you navigate consumer rights and manage returns effectively.
When are you required to accept returns?
Under ACL, businesses must provide a remedy – such as a refund, replacement, or repair – if a product fails to meet a consumer guarantee. Common ways that a product may fail a consumer guarantee include if it:
- is faulty or defective,
- doesn’t match its description,
- fails to perform as promised.
These rights apply regardless of whether the item was purchased in-store, online, or on sale.
Repair, replacement or refund?
Under the ACL, consumers have rights when goods or services fail to meet a consumer guarantee. As a supplier, you may need to provide a remedy, such as a repair, replacement, or refund, depending on the nature of the failure.
For minor failures—issues that can be fixed within a reasonable time and do not significantly impact use or value—the supplier can choose whether to repair or replace the good.
For major failures—serious issues that would have stopped someone from buying the product, make it unfit for purpose, unsafe, or significantly different from what was promised—consumers can choose their preferred remedy, including a refund. You may need to provide a refund even if the product is not in its original packaging or cannot be resold.
Click here for more information about the ACL and consumer guarantees.
Change of mind returns
You are not obligated to accept returns for change of mind unless your store policy states otherwise. Many businesses choose to offer change of mind returns as a goodwill gesture, which can enhance customer satisfaction and loyalty. However, this is entirely at your discretion.
When communicating to customers that you allow change of mind returns, you should clearly communicate any conditions such as:
- Time limits for returns
- Requirements for original packaging and condition
- Whether a refund, exchange, or store credit will be offered
If you do not allow change of mind returns, consider using the ACCC’s point of sale sign.
Online purchase returns
If your business operates online, remember that the same ACL obligations apply. However, for change of mind returns, you can outline your own terms.
Suppliers are also responsible for delivery/shipping costs for a failure to meet a consumer guarantee. For example, if a good is faulty, the supplier should pay for the customer to return the good and refund any original delivery cost (if a refund is required).
Be upfront about who covers return shipping costs if the customer is returning an item due to personal preference rather than a fault.