Have you ever purchased goods from an online store that states that they don’t allow refunds on products, such as video games? Are you the owner of a small business that sells goods or services to customers, and have a strict refund/replacement policy? Whoever you may be, you need to be aware of the consumer’s entitlements, as protected by Australian Consumer Law.

Let’s have a look at the rights of consumers under the law, in light of Ozsale’s recent brush with the Australian Competition and Consumer Commission.

The Small Print: Ozsale’s Terms and Conditions

The online retailer Ozsale Pty Ltd operates a group of ‘flash sales’ websites known for their cheap prices. Websites such as Ozsale.com.au and DealsDirect.com.au. The sites’ low prices were the subject of past media coverage that raised questions over the legitimacy of the goods sold.

Ozsale had included a particular phrase in the terms and conditions of their sites in relation to faulty goods:

“Depending on the fault, you may be offered the choice of refund, repair or replacement of the item (subject to availability).”

This statement had made it seem that the remedy for a faulty product was chosen by Ozsale, with the consumer having no input in what they would get back for their product, like a broken dress strap.

What happened?

The Australian Competition and Consumer Commission (ACCC), as the government watchdog for competition and consumer law in Australia, issued an infringement notice to Ozsale in relation to the aforementioned refund policy.

A major failure or problem is defined under Australian Consumer Law to be if:

  1. The consumer wouldn’t have bought the product if they knew the nature and extent of the problem; or
  2. The goods were significantly different to the description, sample or demonstration model; or
  3. The goods cannot be used for what they are designed for and cannot be fixed to be used within a reasonable time; or
  4. The goods were unsafe, and thus not of acceptable quality.

Consumer law guarantees provide that a consumer is entitled to ask for their choice of either to repair, replace or refund the good if there is a major problem with the product. If the problem is minor, the business can offer a free repair to the consumer, instead of the replacement or refund.

In this situation, the ACCC found that they had reasonable grounds to believe that Ozsale had made a false or misleading representation about consumer rights for faulty goods, due to the aforementioned terms and conditions.

Ozsale did not contest ACCC’s notice, and was required to pay a $10,800 penalty, in addition to agreeing to a court enforceable undertaking to publish a refunds policy that reflects consumer rights. Ozsale were also ordered to implement a compliance program with staff training and a complaints handling procedure.

Conclusion

As you can tell, it was a costly mistake by Ozsale in inaccurately portraying consumers rights, and it serves as a reminder for small businesses that they cannot alter their refunds and replacements policy to serve the needs. If you’re a consumer that is seeking something for a damaged dress, have a look at the consumer law rights, and plan from there onwards. As a small business, you can protect yourself from these issues by putting in place a Website Terms and Conditions of Use.

What experiences have you had with refunds & replacements for faulty goods? Let us know by tagging us @Lawpath.

Richard Yuen

Richard Yuen

Richard is a Paralegal working in our content team which aims to provide free legal guides to facilitate public access to legal resources. With an interest in information law, his primary focus is in how the law adapts to govern the use and development of new technology in a modern environment.