All you Need to Know About Repairs, Replacements, Refunds and Cancellations
Consumer Guarantees When Buying a Product or Service;
Australian Consumer Law (‘ACL’) requires businesses to offer assistance to customers with defective or broken products, sometimes long after the warranty has ended. What kind of remedy you are entitled to depends on how significant or minor the product’s defects are deemed to be. However, retailers are not required to accept returns if you have changed your mind or found a better offer elsewhere. Here are a few essential rights for consumers:
- You do not need to return the item in its original packaging;
- You do need to provide proof of purchase, such as a receipt, credit card statement, confirmation message, or email, and the serial number if it is saved on the retailer’s computer; and
- It is illegal to post signs saying things like “no refunds on sale items.”
Major Issue with a Product:
There is a major fault with a product when it:
- Is unsafe;
- Has either one serious problem or several smaller problems that would’ve stopped you from buying the product if you had known beforehand;
- Is substantially different from the description, sample, or demonstration you received; and
- Can’t be used for its intended purpose or another purpose the consumer told the seller about before they bought it and can’t be easily fixed within a reasonable time.
If a product has significant defects, the customer is entitled to a full refund or replacement of the same product. The entire amount the customer paid must be refunded and not a deducted amount. If the consumer chooses to keep the product, then they must be compensated for the drop in value caused by the fault.
Major Issue with a Service:
There is a major fault with a service when it:
- Creates an unsafe situation;
- Has either one fundamental problem or several smaller problems that, if known about in advance, would deter someone from purchasing the service; and
- Is not able to be used for its intended purpose or one for which the customer notified the seller, or it fails to provide the intended result and is difficult to repair promptly.
If a service has significant flaws, the consumer can choose to cancel the contract and receive a refund; however, this refund might not be complete because the customer will still need to pay for any work that has already been completed and in accordance with expectations. The customer also has the option to continue with the contract at a discounted rate that accounts for the issue. If the customer made an upfront payment, they are entitled to a partial refund. The amount of money, however, will vary depending on whether any or all of the services were rendered without incident or at all.
Minor Issue with a Product or Service:
Smaller issues, such as a hole in a piece of clothing or a scratch on a product, do not fall under the major defect category and are referred to as minor issues. As soon as this is discovered, the business has to either solve the issue or fix the product at no cost. For minor problems, the business is not required to provide a replacement or a refund, although they are free to do so.
If an electronic product has a minor defect, the business must also notify the customer via a repair notice about any potential loss of stored data or the use of any refurbished products or parts.
When a Business Can’t or Won’t Fix a Minor Problem:
If a business is unable or unwilling to address the issue promptly, or at all, a customer is entitled to:
- Get it fixed elsewhere, to which the business will reimburse you for the reasonable cost of the fix or repair;
- Receive a refund or a replacement; and
- Ability to keep the product or cancel the service and be compensated for the value that was lost as a result of the problem.
Changes to Services:
Customers and businesses may have a contract in place for the provision of services, such as a gym membership, to be provided over time. Customers may be entitled to a remedy if the company modifies the nature of the services during that time. If this modification is a material change in the service, there is an entitlement to remedies for a major problem in service such as a refund. A business must advise its clients of forthcoming modifications if it wishes to change the services it offers. They have to get the customer’s approval before making any major changes to their services, and if they are unable to obtain it, they have to cancel and provide a full reimbursement for the service.
Returning a Faulty Product:
The customer is responsible for returning the defective item to the retailer if it is small and easy to mail. In the case of a larger item, like a couch or television, the business bears the responsibility of returning it within a reasonable timeframe. The cost of this process is likely to be on the consumer, however, if the business determines that the product is defective, they must reimburse the consumer for positing it. Ensure that receipts are kept so that the business may repay you.
Not Entitled to a Repair, Replacement, or Refund:
A consumer is not entitled to a repair, replacement, or refund if:
- The product was thrown away, destroyed, lost, or damaged after delivery;
- The products cannot be removed without damage e.g., wallpaper; and
- Too much time has elapsed. This is dependent on several factors, including the type of product, customer’s usage patterns, the length of time the product could reasonably be used, and the amount of use the product could reasonably be expected to withstand before a problem becomes evident.
How Long Am I Entitled to a Repair, Replacement, or Refund?
According to the ACCC, there is no set period for products, instead, it depends on the item and the price at which it was bought. In general, things with lower prices have shorter reasonable periods, whereas items with higher prices have longer reasonable periods.
Does a Warranty Affect My Rights?
According to the ACL, any product that a business sells must be of an ‘acceptable quality’ and last for a reasonable amount of time. The purchased product will determine the reasonable time characteristics, typically more expensive products including electronics, motor vehicles, and white goods have an expected lifetime longer than the warranty period. The purchase of an extended warranty typically gives you protection on equipment that you would reasonably expect to function that long anyway and sells you rights that are already valid under the ACL. You might be entitled to a remedy if a product develops a fault after the specified warranty period and you believe that it is within a reasonable time.
Extended Warranty:
Consumer rights are enshrined in the ACL above all else and thus businesses are not allowed to claim these rights to only be applicable if you have an extended warranty.
Extended Warranties vs Consumer Law:
The table below is created by CHOICE.
| Extended Warranty | Consumer Law |
| No Lemon Guarantee | |
| You may ask for a replacement if your product needs more than two independent repairs. | There is an entitlement to a repair, refund, or replacement of a product if the product experiences two or more minor failures, and if you would not have bought the product had known about the nature and extent of the failures, then these failures constitute a major failure. |
| Food Spoilage/ Laundry Costs | |
| If there is a problem with your washing machine or refrigerator that results in losses such as spoiled food, you can ask for a reimbursement of $100. | You have the right to request compensation for any losses you suffer as a result of a defective product. There is no cap on the amount of losses, and they can include things such as flooring damage from a washing machine. |
| Paying for Transport for Larger Items | |
| If they cannot complete the repairs at the premises, they will pick up the product and deliver it back. | If a product is too large, too heavy, or too difficult to remove, the business is in charge of covering the expense of shipping or picking up the merchandise as soon as possible. |
| Transferable Cover | |
| If you sell or give your goods as a gift, the new owner may be eligible to inherit your extended warranty. | For one-time transactions between two people in which the seller is not operating a business, the majority of consumer assurances do not apply. Therefore, if someone else purchases your product, they will not be able to seek a remedy if a fault arises. |
| Guaranteed Replacement | |
| For eligible faults, which may include minor faults. | There is no requirement for retailers to provide a replacement—only a prompt repair for minor defects. |
| Guaranteed Repair Time | |
| If they cannot complete the minor defect repairs within a brief time limit (such as 20 days), or the customer will be eligible for a replacement or refund. | If the company is unable to resolve your issue or refuses to provide a free repair within a reasonable amount of time, you have the following options: Pay for the repair elsewhere and reimburse the company; Request a replacement; Request a refund; and Seek reimbursement for any value decline below the purchase price. |
| Guaranteeing Cover | |
| for a predetermined amount of time, such as five years. While some plans provide replacement coverage during this period, others might provide repairs | Products must be durable enough to continue working properly for a fair period after purchase. |
| Repair Cover | |
| There is an entitlement to repairs on any eligible faults. | There is a requirement for retailers to offer to replace, fix, or refund your money if a product has a significant flaw. |
Rejecting a Product After Agreeing to Repairs:
If a consumer agrees to repairs of a product with a major fault due to them being unaware of their entitlement to a refund or replacement, a consumer does not lose this right. If the product still has a major fault, they may be entitled to reject it and return the product.
Refunds for Change of Mind:
There is no entitlement to a refund if you simply change your mind about a product. Under the ACL, the seller only provides a refund if a product has a significant defect.
Case Example:
Australian Competition and Consumer Commission (ACCC) v Mazda Australia Pty Ltd [2021] FCA 1493.
The ACCC accused Mazda of engaging in unconscionable and misleading behaviour in the matter of ACCC v Mazda Australia Pty Ltd [2021] FCA 1493. Mazda violated the ACL’s guarantees by misrepresenting customers’ rights to refunds or replacement vehicles. The court determined that Mazda misled customers by trapping them in excessive repair cycles. The court did not find Mazda’s actions unconscionable, even though it acknowledged the company’s poor customer service since there was not enough evidence to support the claim that the company did not care about the rights of its customers.
The ACCC filed an appeal in an attempt to reverse the trial judge’s decision to reject its allegation of unconscionable conduct, but the Federal Court rejected the appeal, concluding that there was a high threshold for demonstrating unconscionable behaviour.
The case emphasises how crucial it is to comply with and prioritise consumer protection regulations. The court made strong findings against Mazda for engaging in misleading and deceptive conduct, both at trial and confirmed on appeal, even though the ACCC was unable to demonstrate unconscionable conduct.
Reporting an Issue:
If the merchant refuses to offer you a refund, replacement, or repair, contact your local consumer affairs or fair-trading agency. They may be able to assist you in mediating a settlement between the customer and the business. If the ACCC thinks the retailer is systematically misleading customers, they may also assist and look into the company.
