The importance of returns policies

Why do I need a returns policy?

For businesses in the retail sector, having a returns policy is essential for a few reasons. Firstly, it is the law that you have to accept returns in some circumstances. Secondly, it builds consumer confidence in purchasing from your business when the consumer knows how and when returns will be accepted. As a result, having a clear returns policy actually encourages spending on your site or in your store and equips you to deal efficiently and effectively with the inevitable return requests in January.

The Law

You may already be familiar with the Competition and Consumer Act 2010 (Cth), and in particular the Australian Consumer Law (ACL) contained within it. The ACL is designed to protect consumer rights when purchasing faulty or mis-described goods under the value of $100,000 or over this value but purchased for personal or domestic household use. The ACL provides for consumer rights known as consumer guarantees, the most common ones being the guarantee that goods are of acceptable quality, fit for purpose and that they meet the description given to them either by labelling or verbal representation.

The key to understanding and abiding by the consumer guarantee provisions is recognising that you cannot contract out of them. In other words, refusing to offer a refund for faulty or mis-described goods is illegal. Similarly, misleading consumers by displaying a “no refund” sign or statement is also against the law because it contradicts these inherent consumer guarantees.

What do you have to do?

Where a product does not meet the consumer guarantees, the consumer is entitled to a repair, replacement or refund.

Where a service does not meet the consumer guarantees, the consumer is entitled to have the services resupplied by your business, have the services resupplied by another business at your cost, or obtain a refund.

In order to claim under the consumer guarantee provisions, a consumer must have proof of purchase from your business in the form of a receipt or bank statement. If a good is faulty, your business is obliged to pay the reasonable costs of return postage. The consumer does not have to return the goods in original packaging, unless your return policy states this. It is also recommended to state in your policy that goods must be adequately wrapped and protected to ensure they reach the return destination in the condition they were received in by the consumer.

Change of mind

A business is not obliged to provide a repair, refund or replacement for a consumer who simply changes their mind about their purchase or receives an unwanted gift. However, having such a policy is highly desirable to consumers, especially around this time of year when many purchases are gifts. If you choose to offer a change of mind return policy, you can still protect your business by shoring up your terms and conditions, for example by requiring that goods are returned in a particular condition (such as in the original packaging with all labels attached) or within a particular timeframe so that your exposure is limited.

We can help

If you do not have a comprehensive returns policy, we highly recommend putting it on your New Year’s Resolution List. At Lang Legal, we have extensive experience in drafting business terms and conditions which for retailers includes a returns policies. We are available over the festive period to have a no obligation discussion with you regarding your terms via our website or email.