Step 5 of 5 · When it comes back
Refunds and returns for an online shop
An online shop’s returns page can set its own terms for change of mind, but it can’t take away the consumer guarantees: when a product has a major problem the customer chooses a refund or a replacement, and a minor problem must be fixed or repaired for free. The ACCC says it is illegal to rely on store policies or terms that deny these rights, such as ‘no refunds’.
General information. This is general information, not legal advice. The official place to check is the ACCC’s repair, replace, refund, cancel page, linked at the foot of this page, or your state or territory consumer protection agency.
Reading a returns page against the law
Consumer Affairs Victoria makes the point for online sellers directly: its statement that ‘no refunds’ signs are unlawful “also applies to an online store’s refunds and returns policy.” The lines below are the kind a returns page might carry, set against what the regulators say.
| The line | Can it stay? | What the regulator says |
|---|---|---|
| “No refunds.” | No | The ACCC gives ‘no refunds’ as an example of a policy it is illegal to rely on. |
| “No refunds or exchanges on sale items.” | No | The ACCC’s second example of the same thing. |
| “No refunds will be given if you have simply changed your mind.” | Yes, in Victoria’s guidance | Consumer Affairs Victoria says signs worded this way are acceptable. |
| “Contact the manufacturer about faults.” | No | A business must not send a consumer off to the manufacturer for a remedy. |
| “Items must be returned in their original packaging.” | Not as a condition for faulty goods | A product doesn’t have to be in its original packaging, but the business may ask for proof of purchase, such as a receipt. |
| “Refunds are reduced for wear.” | No | A refund for a major problem is the full amount paid, with nothing deducted for the use the consumer has had. |
Major or minor
What the customer is owed depends on how serious the problem is. The ACCC sets out four signs of the serious kind:
“A major problem means the product: is unsafe; is very different from the description or sample; has either one serious problem or several smaller problems that would stop someone buying the product if they knew about them beforehand; 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.”
ACCC, Repair, replace, refund, cancel
For a major problem, the business must give the consumer the choice of a refund or a replacement of the same type of product. The consumer can instead keep the product and be compensated for the drop in value. For an online order the method matters: the money should go back the way the customer paid, unless the two agree on something else.
For a minor problem, the shop must repair the product or fix the problem at no charge. It doesn’t have to offer a replacement or refund, though it can. The ACCC sets out what happens next:
“If the business can’t or won’t repair or fix the problem within a reasonable amount of time, or at all, a consumer is entitled to: get it done somewhere else, with the business paying the consumer back for the reasonable cost of the fix or repair; get a refund or replacement instead; keep the product or cancel the service contract, and be compensated for the drop in value caused by the problem.”
ACCC, Repair, replace, refund, cancel
One more rule for shops that sell electronics: a repair can lose a customer’s stored data, and may use refurbished parts, so businesses must give a repair notice warning about both.
Postage, both ways
- The customer sends it back
When a product with a problem goes back, the customer is responsible for returning anything that can be posted or easily returned. For faulty products that are large, heavy or hard to remove, the business pays the shipping or collects them, within a reasonable time.
- The shop takes a look
A business has the right to assess the product before providing a remedy.
- If there is a fault
The business must reimburse any reasonable return costs the customer has already paid.
- If there isn’t
The business can make the customer pay the collection and inspection costs, but only if it gave a reasonable estimate of those costs before collecting the product.
Change of mind
The ACCC’s wording on change of mind, with the condition it carries:
“Consumers are not entitled to a repair, replacement or refund under the consumer guarantees if: they 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. However, if a business has a ‘change of mind’ policy, they must follow it.”
ACCC, Repair, replace, refund, cancel
Consumer Affairs Victoria adds that a store offering change-of-mind refunds, exchanges or credit notes should display the policy at the point of sale or on its website, so customers can read it before buying. It also notes that a refund policy is not a cooling-off period: standard consumer purchases have no automatic cooling-off period, unless the terms and conditions provide one.
Who carries the cost in the end
The shop deals with the customer, but it doesn’t always bear the cost. Where a problem is the manufacturer’s fault, such as a manufacturing defect, the manufacturer must reimburse the supplier for the cost of the repair, replacement, refund or other compensation. A shop can’t send the customer to the manufacturer instead, even when the manufacturer caused the fault.
The track ends where it began. A product the ACCC would call unsafe is a major problem here, and the duties that come before the sale are in product safety for online sellers; a parcel that never arrives at all is a delivery question.