Advertising and selling guide

Misleading consumers about their rights

Consumer guarantees for goods or services cannot be altered or waived by sellers or consumers. Any term in a contract which tries to limit or exclude consumers’ rights under the consumer guarantees will be void. This means that the business cannot rely on it to avoid providing consumers with a remedy. That is, contracting out of the guarantees is not permitted.

Further, if a business attempts to restrict or limit consumers’ rights under the guarantees, it is likely to also breach the provisions on misleading or deceptive conduct and false or misleading claims.

Example: A computer repairer offers a computer repair service. When customers engage with the repairer, they are required to sign a form which contains the terms and conditions that stipulate that any damage caused by the repair would not be the responsibility of the repairer. This is not allowed under the ACL.

Be very careful about what you say to consumers about their refund rights. This includes the wording of any signs, advertisements or any other documents. Signs that state ‘no refunds’ are unlawful, because they imply it is not possible for consumers to get a refund under any circumstance – even when there is a major problem with a product. 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.

Real case study: The Federal Court ordered that a manufacturer and retailer of computer hardware pay a $3 million civil pecuniary penalty for making false or misleading representations to consumers and retailers regarding consumer guarantee rights, including that:

  • the remedies available to consumers were limited to the remedies available at the business’ discretion
  • consumers were required to have their product repaired multiple times before they were entitled to a replacement
  • the warranty period for products was limited to a specified express warranty period
  • consumers were required to pay for remedies outside the express warranty period
  • products purchased online could only be returned at the business’ discretion.

Case law: Federal Court of Australia - [2013] FCA 653
Media release: IT company to pay $3 million for misleading consumers and retailers

Compliant refund-policy signs are available free to download from the ACCC website.