Retailers – don’t get caught out breaching consumer law in your Black Friday sales

Nov 9, 2021

Media outlets are reporting that this year’s sale season is shaping up to be bigger than ever, in light of overstocked retailers and pent-up demand or ‘revenge spending’ among consumers.

With retailers already starting to promote their Black Friday discounts in advance of the 26 November sale date, it’s important for businesses to understand their obligations in relation to the Australian Consumer Law, which includes ensuring that any advertising materials comply with the strict legal requirements and that retail staff are aware of and do adhere to the consumer guarantees when dealing with customers seeking to return sale items.  Earlier this year, caravan manufacturer Jayco was fined $75,000 for failing to issue a full refund, when required to do so under the Australian Consumer Law.

We take a look at what retailers should know in advance of the sale season.

‘Final Sale.  No returns or refunds’ – can you say it?

Quite simply, no.

The ACCC has released guidance stating that ‘No refunds’ or ‘No refunds or exchanges on sale items’ signs are unlawful, on the basis that they mislead consumers into believing that they are unable to obtain a refund in any circumstances.

Regardless of whether an item was purchased on sale, the consumer guarantees will still apply, and a refund may be required where an item is faulty or fails to meet one of the other guarantees.

Similarly, store policies which refuse a refund after a certain period, for example 14 days from the date of purchase, can also be misleading as the consumer guarantees will continue to apply for a ‘reasonable’ period after purchase. What is ‘reasonable’ will depend on a variety of factors including the nature of the particular item, the purchase price and the relevant defect.

When don’t you need to provide a refund?

 Whilst a customer is entitled to a repair, replacement or refund where goods or services fail to meet the consumer guarantees, the consumer guarantees don’t require a retailer to provide a refund in circumstances where a customer simply changed their mind, ordered the wrong product, decided they no longer like or require the item or otherwise found the item cheaper elsewhere.

Other circumstances where a refund may not be required include where a customer has misused a product and that misuse has caused the problem or where the customer was otherwise made aware of any faults before purchasing the item.

Can you provide a store credit instead of a refund?

If a customer is entitled to a refund pursuant to the consumer guarantees, then the retailer is required to refund any money or other form of payment paid by the customer and the Australian Consumer Law prohibits retailers from offering a credit note instead of a refund in these circumstances.

Online v In Store sales

When it comes to the consumer guarantees, there’s no difference between the sale of products from an online or bricks and mortar retail store.  The customer doesn’t receive any greater (or lesser) rights just by shopping online.

Return shipping costs – who is responsible?

The consumer guarantees provide that the customer is generally responsible for returning a defective item to the relevant retailer, and may recover their reasonable postage or transportation costs from the retailer where the item has failed to meet one of the consumer guarantees. This obligation on the customer to return the item to the retailer does not apply if the cost to do so would be significant.

If a returned item is subsequently found not to be defective, or to have not otherwise failed to meet one of the consumer guarantees, then the customer is generally responsible for any costs associated with returning the item, including any return shipping costs.

Are you required to accept products for return which are no longer in their original packaging?

Yes.

Where a product fails to meet one of the consumer guarantees, for example the product is significantly different from the description provided online or by sales personnel or if the product is faulty or unsafe, then the customer will be entitled to return the item for repair, replacement or a refund (depending on the nature of the fault) regardless of whether the original packaging has been retained or is intact.

Do the consumer guarantees apply to a business that purchases your products?

Yes.

The consumer guarantees protect individuals and businesses which acquire:

  • Goods and services with a value of up to $100,000 regardless of the purpose for which those goods or services were acquired;
  • Goods and services with a value of greater than $100,000, where those goods and services are of a type ordinarily acquired for personal, domestic or household use or consumption; and
  • Vehicles or trailers used predominantly to transport goods on public roads, regardless of the cost.

It’s important to note that if a business buys goods for the purpose of reselling them, or transforming them into a product to sell, then the consumer guarantees won’t apply.

So, what next?

 With Black Friday less than a month away, it’s important for retailers to understand what they are (and equally, what they are not) required to do when a customer seeks to return a sale item.

Need further guidance? The Kalus Kenny Intelex commercial team is here to help.