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Consumer rights when buying products and services
Rights when consumer guarantees aren’t met
Consumers are entitled to a solution of a repair, replacement or refund if a product or service they buy doesn’t meet one of the basic rights. These basic rights are known as consumer guarantees.
The solutions are collectively referred to as remedies. What remedy the consumer is entitled to generally depends on:
- what was bought (whether the problem is with a product or a service)
- the seriousness of the problem (whether the problem is major or minor).
In some situations, the consumer gets to choose the remedy they prefer.
A business has the right to assess the product or service before they provide a remedy.
Businesses can’t take away a consumer's right to a refund or replacement for faulty products or services. It’s illegal for businesses to rely on store policies or terms and conditions which deny these rights. For example, policies which say ‘no refunds’ or ‘no refunds or exchanges on sale items’.
Occasions when consumers aren't entitled to a repair, replacement or refund
Consumers are not entitled to a repair, replacement or refund under the consumer guarantees if:
- they got what they asked for but simply changed their mind, found the product cheaper somewhere else, or decided they didn't like the purchase or had no use for it. However, if a business has a ‘change of mind’ policy, they must follow it.
- the problem with the product was caused by the consumer misusing it
- they knew of or were made aware of the problem with the product before they bought it (but they may be entitled to a repair, replacement or refund for a different problem with the product that wasn’t made clear to them before they bought it)
- asked for a service to be done in a certain way against the advice of the business
- the problem with a service was caused by the actions of someone other than the business.
Major problem with a product
What makes a product problem major
A major problem means the product:
- is unsafe
- is very different from the description or sample
- has either one serious problem or several smaller problems that would stop someone buying the product if they knew about them beforehand
- can’t be used for its normal purpose, or another purpose the consumer told the seller about before they bought it, and can’t easily be fixed within a reasonable time.
When a business sells a product with a major problem, or a product that later develops a major problem, it must give the consumer the choice of a:
- refund, or
- replacement of the same type of product.
A refund should be the full amount the consumer paid for the product. The business must not deduct an amount from a refund to take into account the use a consumer has had of the product.
Refunds should be provided in the same form as the original payment, unless the business and consumer agree otherwise.
A consumer can also choose to keep the product but be compensated for the drop in value caused by the problem.
In some cases, a consumer can also be entitled to compensation for extra damages and loss. See Claiming compensation for more information.
Example of a refund to the consumer
A consumer purchases accommodation at a hotel in full using their credit card when booking. The hotel cannot provide the accommodation to the consumer because the hotel made an error with the booking and provided the room to someone else, with no other rooms available. The hotel must refund the money to the consumer’s credit card.
The hotel can’t provide a refund to the consumer by way of giving them hotel loyalty points, unless the consumer chooses to accept this instead.
However, if the consumer had purchased the accommodation booking using hotel loyalty points, the hotel can provide loyalty points back to the consumer as their refund. The consumer can’t demand a cash refund instead.
Who is responsible
Businesses are responsible for resolving problems with products they sell to consumers.
Businesses must not tell consumers to go to the manufacturer for a remedy.
However, for some consumer guarantees, consumers can choose to seek a remedy from the manufacturer, rather than the business they bought the product from. If they do so, consumers will only be entitled to be compensated for the drop in value caused by the problem and, in some cases, other compensation. A manufacturer may offer to resolve the problem by providing a repair, refund or replacement, but consumers cannot demand this from the manufacturer.
Major problem with a service
What makes a service problem major
A service has a major problem when it:
- creates an unsafe situation
- has either one serious problem or several smaller problems that would stop someone buying the service if they knew about them beforehand
- can’t be used for its normal purpose, or for a specific purpose that the consumer told the seller about, or doesn’t achieve a specific result that the consumer told the seller about, and can’t easily be fixed within a reasonable time.
When a service has a major problem, a consumer can choose to:
- cancel the contract and get a refund. This may not be a full refund, as the consumer needs to pay a reasonable amount for any work done so far and as expected, or
- keep the contract, but pay a lower price that takes the problem into account.
If the consumer has already paid upfront, they have the right to get some money back. How much money will depend on whether some or all of the services provided did not have problems, or whether they were provided at all.
Minor problem with a product or service
When a product or service has a minor problem, the business must fix the problem or repair the product for free.
The business does not have to offer a replacement or refund for a minor problem, although it can choose to do this.
When repairing electronic products, like mobile phones, computers and music players, consumers can lose their stored data. Businesses may also use refurbished products or parts when repairing products. Businesses have to warn consumers about both of these things by giving them a repair notice.
When the business can’t or won’t fix a minor problem
If the business can’t or won’t repair or fix the problem within a reasonable amount of time, or at all, a consumer is entitled to:
- get it done somewhere else, with the business paying the consumer back for the reasonable cost of the fix or repair
- get a refund or replacement instead
- keep the product or cancel the service contract, and be compensated for the drop in value caused by the problem.
What is a ’reasonable’ amount of time for a business to fix a problem will depend on the nature of the product or service. For example, it may take longer for a repairer to attend a house to fix an installed dishwasher than for a pair of pants to be repaired in-store.
Changes to services
Consumers may have an agreement with a business to provide its services over a period, for example a gym membership, or music lessons. If the business changes the nature of the services during that period – for example, in person guitar lessons replaced with online guitar lessons, or gym memberships replaced with access to online workout plans – consumers may be entitled to a remedy.
If the change is a material change to the service the business agreed to provide, then consumers are likely to be entitled to the remedies for major problems with a service. Consumers are unlikely to be entitled to those remedies if the change to the service means that the business is still largely providing the service it originally agreed to.
Businesses that change their services in this way should notify their customers of the upcoming change as soon as possible . Where it is a material change, a business should:
- seek the customer’s consent to continue with the changed service
- cancel the contracts of, and refund any pre-payments made by, those customers who do not consent to continue with the changed service.
Returning a faulty product
The right to return a product
Consumers have the right to return a product if they think there’s a problem.
The product does not have to be in its original packaging, but a business is entitled to ask consumers to provide some form of proof of purchase, such as a receipt.
Responsibility for returning products
Consumers are responsible for returning products that can be posted or easily returned.
Businesses are responsible for paying for the shipping costs or collecting faulty products that are large, heavy or hard to remove, such as:
- widescreen televisions
- installed appliances, like stoves or dishwashers
- extension ladders stuck in an extended position.
This must be done within a reasonable time.
If the business confirms that the product does have a problem, it must reimburse the consumer for any reasonable return costs they have already paid.
Consumers should keep receipts for postage or transport costs so that they can be repaid by the business.
If the business finds that the product does not have a problem, it can make the consumer pay the collection and inspection costs. To do this, the business must give the consumer a reasonable estimate of these costs before collecting the product.
When a manufacturer must repay a business
Some problems with products may be the fault of the manufacturer, rather than the fault of the business who sold the product to consumers. For example, if the problem with the product is:
- caused by a manufacturing defect
- that the product doesn’t meet the extra promises the manufacturer made about its quality, condition, performance or characteristics.
If a business provides a repair, replacement, refund, or other compensation to a consumer for these problems, the manufacturer must reimburse the business for these costs. This includes the costs of parts and labour that may be involved in providing a solution to a consumer.
Manufacturers are entitled to assess the product in this situation. But they must not mislead businesses about their rights to have these costs repaid, or act unfairly against businesses that request repayment of these costs. Manufacturers also can’t use their contracts with businesses to take away businesses’ rights to be reimbursed for these costs.
A business has 3 years to ask the manufacturer for reimbursement, from the earliest of:
- the day they fixed any problems with the consumer’s product
- the day the consumer took any legal action against the supplier for the problem.
If a business has a dispute with a manufacturer about repayment of these costs, it can take legal action. The business may wish to seek legal advice about this.
Repair, replace, refund problem solver
If you're not sure whether the consumer guarantees apply to a specific purchase, try our Repair, replace, refund problem solver.
You'll be asked a series of questions about the purchase.