Always qualify your ‘no refunds’ statements

Always qualify your ‘no refunds’ statements

As a retail-specialised lawyer, I’ve worked on more Returns Policies than I can count, and it always surprises me that retailers continue to get caught telling customers “no refunds” without regard to their obligations under the Australian Consumer Law (ACL).

It is essential that if a retailer wants to limit returns on particular items, such as sale items, that it is clearly, transparently stated that the Consumer Guarantees continue to apply and that customers will be entitled to a refund where a product is faulty or not of acceptable quality.  The Consumer Guarantees cannot be contracted out under the ACL.

Recently, Lululemon, a popular athletic wear company, was required to pay penalties totalling $32,400 for alleged false or misleading representations about consumer guarantees in three instances.

No Returns or Exchanges for Sale Items

Lululemon offered items for sale for around 3-4 weeks, with the words “We made a little extra – don’t be shy, help yourself.  It’s yours for keeps, so no returns and no exchanges”.

Under the ACL, customers are entitled to returns for faulty items or items that are not of acceptable quality.  These guarantees cannot be contracted out of.  It is important to note that even if this is clarified in fine print, it may still be a breach of the misleading and deceptive conduct laws if there is an overall impression that customers have no rights to a return or exchange in any circumstance.

Returns Policy

The Lululemon Returns Policy stated: “Final sale items like underwear, water bottles + We Made Too Much gear are yours for keeps”, which was alleged by the ACCC to represent that consumers were not entitled to a remedy, even in accordance with consumer guarantees.

Customer Interaction

It was alleged that a customer contacted Lululemon requesting a refund for items she considered faulty, to which a Lululemon staff member replied: “We do not offer refunds for quality affected garments”.  The ACCC alleged that this represented the customer was not entitled to a refund if the products were faulty, contrary to the ACL.

Take-aways

Always make it clear to your customers when sale items, or items that cannot be re-sold due to hygiene reasons such as underwear or swimwear, may still be returned if faulty or not of acceptable quality in accordance with the ACL.

It is possible to exclude returns for change of mind, but do not make sweeping “no returns” statements in any advertising, website content or returns policies without clarifying consumer rights to avoid getting hit with large penalties.

If you need advice about the terms of your sales promotions or if you think it’s about time you had your Returns Policy reviewed by an experienced legal professional, do not hesitate to contact me at  or call me at 1300 033 934 for a no-obligation quote.