Refund Policy

What is a Refund Policy?

A Refund Policy is a document which sets out how a vendor of goods or services deals with purchasers' requests for refunds (or repairs or replacements).

In a Refund Policy, the vendor explains when purchasers may be entitled to a refund, repair or replacement, when they may not, and what they can do to request one.

What is the difference between a Refund Policy and Terms and Conditions?

A Refund Policy sets out a business's general rules and approach to dealing with refunds. It is effectively a set of guidelines which the business follows.

A set of Terms and Conditions on the other hand, is the actual contract between the business and the customer. The customer either signs the Terms and Conditions, checks a box to confirm that they agree to the Terms and Conditions, or is notified that by making a purchase, they agree to be bound by the Terms and Conditions. There are a number of different types of Terms and Conditions such as a set of Terms and Conditions for Website or Mobile Application, a set of Terms and Conditions for Sale of Goods Online, or a Contract for Sale of Goods.

Is it mandatory to have a Refund Policy?

No, it is not mandatory to have a written Refund Policy. However, under Australian law, consumers have certain rights in relation to refunds (as well as repairs or replacements) that the business needs to honour regardless.

Therefore, most businesses find that having a written Refund Policy is worthwhile as it helps them to manage these obligations and to generate a positive relationship with their customers.

What is not allowed in a Refund Policy?

A Refund Policy should not contain provisions that attempt to take away a customer's legal right to a refund (or repair or replacement). Therefore, polcies that state "No Refunds" are likely to be illegal.

What can be the duration of a Refund Policy?

A Refund Policy can last indefinitely. However, businesses should routinely review their policies to ensure that they continue to reflect the current law and the business's processes and procedures.

What has to be done once a Refund Policy is ready?

The purchaser is not required to sign this document. Instead, it is provided to the purchaser at the point of purchase, so that the purchaser can be aware of the policy prior to buying anything from the vendor.

Once prepared, the document can be made available to purchasers, for example, by having it available at a point of sale, and/or posting a copy in a prominent place on the vendor's website (if the vendor is selling online).

What must a Refund Policy contain?

A Refund Policy should contain:

• The name of the business that is preparing the policy.
• Information for customers about their rights under the Australian Consumer Law.
• A statement confirming the business's commitment to the Australian Consumer Law.
• Information about when a customer may be entitled to a refund (or repair or replacement), and when they may not.
• Information about what customers need to do in order to claim a refund.

Which laws are applicable to a Refund Policy?

For purchases that have been made after 1 January 2011, the Australian Consumer Law may apply, and may impose a set of minimum Consumer Guarantees.

For purchases prior to that date, the Trade Practices Act 1974 (Commonwealth) may apply, as well as state and territory fair trading laws.

In addition, any contracts for the sale and purchase of goods or services may be affected by general principles of contract law, as provided by the common law.

The Consumer Guarantees under the Australian Consumer Law require that:

Products must be of acceptable quality, that is:-

• safe, lasting, with no faults;
• look acceptable;
• do all the things someone would normally expect them to do.

Acceptable quality takes into account what would normally be expected for the type of product and cost.

Products must also:-

• match descriptions made by the salesperson, on packaging and labels, and in promotions or advertising;
• match any demonstration model or sample you asked for;
• be fit for the purpose the business told the consumer it would be fit for and for any purpose that the consumer made known to the business before purchasing;
• come with full title and ownership;
• not carry any hidden debts or extra charges;
• come with undisturbed possession, so no one has a right to take the goods away or prevent the consumer from using them;
• meet any extra promises made about performance, condition and quality, such as life time guarantees and money back offers;
• have spare parts and repair facilities available for a reasonable time after purchase unless the consumer were told otherwise.

Services must:-

• be provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage;
• be fit for the purpose or give the results that the consumer and the business had agreed to;
• be delivered within a reasonable time when there is no agreed end date.

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