Consumer watchdog sounds warning to clothing retailers over refund policies

Chinese personal shoppers have created a new type of retail store in Australia known as daigou

The Australian Competition and Consumer Commission (ACCC) is warning clothing retailers to lift their game when it comes to their online terms and conditions for returns, with the watchdog saying stores continue misrepresent the consumers’ ability to return purchases like sale items and underwear.

The ACCC says complaints about refunds for clothing purchases are one of the top reasons Australian consumers contact the watchdog, with ACCC deputy chair Michael Schaper telling SmartCompany digital retail businesses need to do more to fulfill their legal obligations.

The watchdog has received more than 750 complaints from customers this year about consumer rights for clothing purchases, with Schaper saying too many online providers are not telling shoppers they have a right to replacement or refunds for faulty products.

There’s a misconception by retailers and the public that online has different rules than bricks and mortar, people still think that,” he says. 

This results in both businesses telling consumers incorrect information about their rights and customers failing to demand refunds or exchanges when they are entitled to them.

The commission is current working with 12 online retail businesses to ensure they bring terms and conditions on returns in line with Australian consumer law. Schaper says there are three common errors he sees retailers making.

“One of the things we see [online] is the comment that if an item is on sale, it is not refundable. That is just wrong,” he says. Consumers still have a right to an exchange, refund or repair for online clothing purchases that are faulty or not as described.

“The second one is swimwear and underwear, and the idea that this is not ever refundable,” Schaper says.

Under Australian consumer law, shoppers are able to return “whatever you buy — underwear, socks, jocks and knickers”, Schaper says, if they have an issue that would see a consumer entitled to a refund or repair.

“Then, you’ve got the idea that you have to return items in completely “original” condition in order to get a refund,” Schaper says.

“[If that were the case], you couldn’t possibly even try on the product without voiding your rights.”

The commission highlights that particularly for online purchases, it is necessary for shoppers to take clothing from packaging and try it on before working out whether it is actually fit for purpose.

Schaper says the commission will be monitoring online retailers closely over the coming months, with the number of flash sale events like Black Friday acting as a critical time for getting the policy right.

Penalties the same for online retailers

Schaper says not only are the consumer law requirements for returns policies the same for online retailers, so are the penalties for breaching consumer law.

“The maximum penalty for a business is $1.1 million, and we can also issue infringement notices for businesses who breach the law,” he says.

While the legal requirements are the same for online businesses, there are some elements of service delivery that are unique to e-commerce businesses. Schaper says business owners should take care to exercise best practice on their postal returns policies and timeframes.

“There’s often a time-limit of 14 days for returns listed, but this is not the case. The law says the return can be ‘in a reasonable period of time’.”

When it comes to the cost of returning a faulty item by post, Schaper advises it’s best practice for businesses to cover the costs on this.

Overall, the most important thing for online retailers towards the end of the year is to be flexible with customers when it comes to honouring returns, if not from a compliance perspective, then from a branding one, the commission suggests.

“The important thing is that businesses need to adopt this in a marketing sense. From a marketing point of view, you don’t want to be taking time [in disputes] on these issues.”

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