ACCC cracks down on misleading return policies: what you need to know.

Navigating the world of consumer rights can often feel overwhelming, especially when a product or service doesn’t meet your expectations. In Australia, the Australian Consumer Law (ACL) offers key protections for consumers, ensuring that products and services meet certain standards. But what exactly are consumer guarantees, and how do they differ from warranties? This blog takes a closer look to help provide clarity for consumers and businesses.

What are consumer guarantees?

Under the ACL, consumers are automatically entitled to certain guarantees when purchasing goods or services. These are legal rights that ensure products meet basic standards, such as being of acceptable quality, fit for purpose, and matching the description provided by the seller. These guarantees apply regardless of any additional warranties businesses may offer.

ACCC’s recent update on business compliance

Last year, the Australian Competition and Consumer (ACCC) published a list of Compliance and Enforcement Priorities that outlined the focus areas for the ACCC in 2024/25, including consumer guarantees. This resulted in the ACCC recently conducting a sweep of over 2,000 Australian retail websites which found several businesses potentially violating the ACL with misleading return policies. The ACCC uncovered problematic terms such as:

• imposing time-limits for returns on faulty products
• stating ‘no refund’ policies for sale or specialised items
• referring to manufacturer warranties as the only option for consumer remedies
• charging restocking fees for returned faulty items

These practices directly contradict consumer rights under the ACL, which cannot be overridden by business terms.

The ACCC has sent warning letters to businesses, urging them to update their terms to comply with the law. This highlights the importance for businesses to review their return policies and ensure that their websites provide accurate information about consumer guarantees.

Consumer rights under the ACL

Under the ACL, consumers have basic rights when purchasing goods or services, including:

• Acceptable quality: Goods must be safe, durable, and free from defects.
• Fitness for purpose: Products must meet the specific needs as advertised.
• Matching description: Products must align with the description given by the seller.
• Supply of services: Services must be performed with reasonable skill and care and within a reasonable time frame.

These rights are automatic and cannot be removed or restricted by a business, no matter the terms and conditions they set.

Consumer guarantees vs warranties

It’s important to differentiate between consumer guarantees and warranties:

• Consumer guarantees: These are mandatory protections under the law and apply to all goods and services purchased for personal use.
• Warranties: These are optional promises made by businesses offering additional protections beyond what the law requires. Warranties cannot replace the consumer guarantees, but they can provide extra assurance.

What happens if a good or service fails to meet a guarantee?

If a product or service doesn’t meet the consumer guarantees, you are entitled to:

• Repair, replacement, or refund: Businesses cannot deny this right with blanket ‘no refund’ policies.
• Compensation for loss or damage: If the product causes additional harm, you can seek compensation.
• Cancellation of services: If a service doesn’t meet expectations, cancellation may be possible, especially if the failure is significant.

Businesses must ensure their return policies do not restrict these rights in any way. For example, terms stating that items ‘cannot be returned’ or ‘no refunds for sale item’ will be misleading under the ACL.

How the ACCC is enforcing compliance

The ACCC is actively monitoring compliance with the ACL, and businesses found violating the law can face enforcement actions. Recent sweeps are a reminder to businesses to revise their policies and update their terms to align with the consumer guarantees.

What should businesses do?

To stay compliant with the ACL and avoid penalties, businesses should:

• Review return policies and website terms and conditions: Ensure they align with consumer guarantee rights.
• Avoid misleading statements: Do not claim that no refunds are available for faulty goods or impose unreasonable restrictions on returns.
• Educate consumers: Clearly communicate consumer guarantee rights on your website to ensure transparency.

It is vital for businesses with a retail website (particularly where they are unsure about their obligations under the ACL) to seek legal guidance. The Bespoke team can help businesses navigate the complexities of consumer law and ensure the relevant terms and policies are compliant with all legal requirements.