Why Need A Terms & Conditions Of Use? A Lululemon Lesson

Canadian activewear brand, Lululemon, has landed itself in hot water after making false or misleading representations about consumer guarantee rights on its Australian website.

If you operate an online business, LawPath has customisable and ready for use Website Terms and Conditions of Use that can be easily made in under 5 minutes.

Background

The Australian Competition and Consumer Commission alleged the popular yoga and running brand advertised two online notices that falsely told customers they were not entitled to a refund or replacement, which was not the case under the Australian Consumer Law (ACL).

First Statement

From 1 May 2017 to 24 May 2017, Lululemon listed sale items on its website under the heading “We Made Too Much”. The first statement read “We made a little extra – don’t be shy, help yourself. It’s yours for keeps so no returns and no exchanges”. But the brand’s ethos says the opposite. Lululemon offers a quality promise that said “If our product doesn’t perform for you, we’ll take it back.”

According to the consumer watchdog, this statement represented consumers were not entitled to exchange, return or obtain a refund for products under any circumstances. ACCC deputy chair Delia Rickard said in a media release “if products develop a fault which constitutes a major failure, customers are entitled to a refund, even if the product was purchased on sale.” Generally under the ACL, goods and services come with an automatic guarantee they will work and do what consumers expect. The ACCC confirms if a product develops a fault which constitutes a major failure, customers are entitled to a refund. This includes products that were purchased on sale.

If you’re interested in reading about refunds on sale items, check out Is It Legal For Storeowners To Put ‘No Refund’ Signs?.

Second Statement

Lululemon published on the return policy section of its website “Final sale items like underwear, water bottles + We Made Too Much gear are yours for keeps”. The ACCC claims this statement represented to consumers they are not entitled to a remedy for their products. In November 2016, it was reported that a customer contacted the Vancouver-based company requesting a refund for products she considered were faulty. However, she received an email from a representative that said “We do not offer refunds for quality affected garments”.

In summary, businesses must understand the importance of having a robust refund and return policy that does not breach consumer law. The Lululemon debacle demonstrates representations made by a business about consumers’ rights to return goods or obtain a refund must accurately reflect consumer guarantee rights under the ACL. It is unacceptable for retailers to refuse helping a customer seeking a remedy or try to circumvent a fault problem by referring them to a manufacturer or importer. Further, the main point is if you have an online business, you need to make sure you have got comprehensive and clear website terms and conditions (T&C’s).

For a comprehensive discussion about consumer rights and penalties business owners may face, check out Cheap Fashion – Can I Get a Refund?.

Outcome

The athleisure brand Lululemon Athletica Australia must pay penalties totaling $32,400, which were issued under the infringement notices. Although, the ACCC emphasises the infringement notice is not an admission of a contravention of the ACL. Ultimately, the consumer watchdog has the power to issue an infringement notice where it has reasonable grounds to believe a person has contravened consumer protection laws.

Final Thoughts

Lululemon being fined for its misleading return policy is a reminder to retailers and business owners that when customers purchase goods that are faulty or below the minimum standard of quality, they have a right under the law to obtain a refund. Businesses cannot tell customers they do not accept refunds simply because the item is on sale or for any other reason that excludes the ACL. In order to avoid having a claim brought against your business, you can create your Website Terms and Conditions of Use on LawPath that will cover delivery of goods, returns and refunds policy in accordance with Australian consumer law and consumer guarantees.

Let us know your thoughts about retailers refusing returns on sale items by tagging us at #lawpath or @lawpath.

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