Retailers have been warned to comply with the Australian Consumer Law, which came into effect on January 1 and is aimed at protecting consumers who return sale items.
Under the new legislation, goods purchased on sale that prove to be faulty are protected by the same guarantees as full-price items.
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In December last year, the Australian Competition and Consumer Commission fined retail group M Webster Holdings for misleading consumers about their rights when returning sale items.
Webster, which owns fashion brands David Lawrence, Jigsaw and Marcs, was fined after all three stores issued receipts and displayed signs stating no exchange, refund or credit would be given on sale goods from August 2008 to July 2010.
Australian Retail Association executive director Russell Zimmerman says retailers will no longer get away with putting up a sign stating they do not offer refunds on sale goods.
“If somebody comes in and they buy something on sale and then change their mind, the retailer has the right to say, ‘I’m sorry I don’t have to do anything for you’,” Zimmerman says.
“But if it is faulty, [consumers] have exactly the same rights as if it was full price.”
According to the ACCC, the consumer guarantees cannot be changed, limited or refused by a seller, manufacturer or importer.
It is also illegal for a seller to do anything that misleads consumers about their rights. For example, by claiming that no refunds will be given under any circumstances.
“Any misleading claims a business makes about consumers’ rights under the consumer guarantees are invalid,” the ACCC says.
“These claims are also likely to breach provisions of the Australian Consumer Law relating to false, misleading and deceptive conduct.”
Retailers must not tell a consumer that a consumer guarantee:
- Does not exist.
- May be excluded.
- May not have a particular effect that it does in fact have.
The ACCC reiterates that signs stating ‘no refunds’ are illegal because they imply it is not possible to get a refund under any circumstance, even when there is a major problem with the goods or service.
For the same reason, the following signs are also unlawful:
- ‘No refund on sale items’.
- ‘Exchange or credit note only for return of sale items’.
However, signs that state, ‘No refunds will be given if you have simply changed your mind’ are acceptable.
The ACCC says business owners must also honour any warranty or promise they make to a consumer.
“This includes verbal statements made by staff about what a good or service will do or how long it will last for, and also written policies about what you will do if there is a problem with a good or service,” it says.
“Any business can make extra warranties or promises about their goods or services. However, they must still honour the consumer guarantees.”
“This means you must fix a problem when goods fail to meet a consumer guarantee, even if the consumer does not have a warranty or extended warranty, or the goods are out of warranty.”