Refund Policy – Because of the current crisis in health and the economy, people are very concerned about spending money. They are looking carefully at refund policies for online sales of products and services.
Are you selling online – products which require delivery, courses, memberships, programs, coaching or consulting service? Then you need a Refund Policy.
Is your Refund Policy up to date and working for you?
A good Refund Policy is so important or your business now more than ever. Why? Because customers are concerned even more about online scammers selling goods and services who do not deliver. Consumers are advised to read Refund Policies carefully AND to keep receipts and invoices as proof of purchase.
Service contracts, client agreements, or e-commerce policy contain refund provisions. If you don’t have a service contract, you must at the very least have a refund policy for the sale of your services and products that clearly outlines the conditions under which a customer or client can receive a refund.
Australian Consumer Laws state that a blanket NO REFUNDS POLICY is illegal.
An explanation of your Refund Policy is required.
To work out what you need to have in your Refund Policy you need to understand the rights that consumers have under Australian Consumer Law.
When Consumers buy products and services they come with automatic guarantees by the businesses that
- the consumer will get what they paid for; and
- the product will work and do what it is promised; and
- the services will be delivered as described and promised.
Products must be of acceptable quality normally expected for the type of product and cost i.e
- safe, lasting, with no faults or defect,
- look acceptable
- do all the things someone would normally expect them to do.
- match descriptions made by the salesperson, on packaging and labels, and in promotions or advertising
- match any demonstration model or sample you asked for
- be fit for the purpose the business told you it would be fit for and for any purpose that you made known to the business before purchasing
- come with full title and ownership
- not carry any hidden debts or extra charges
- come with undisturbed possession, so no one has a right to take the goods away or prevent you from using them
- meet any extra promises made about performance, condition and quality, such as lifetime guarantees and money-back offers
- have spare parts and repair facilities available for a reasonable time after purchase unless you were told otherwise.
- be provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage
- be fit for the purpose or give the results that you and the business had agreed to
- be delivered within a reasonable time when there is no agreed end date.
Consumer guarantees on products and services also apply to:
- bundled products and services
- gifts with proof of purchase
- sale items
- online products and services bought from Australian businesses
- second-hand products from businesses, taking into account age and condition.
If something isn’t right, then under Australian Consumer Law, consumers have a right to the following if they
Therefore your Policy should state the different circumstances under which your business will refund a purchase price or service fees, for example:
- out of stock
Other important inclusions in your Policy include
- The exact procedure for a return or exchange?
- Return packaging – does the customer need to use your packaging or can they use their own?
- Proof of purchase – do they need to include the order slip or receipt?
- Return and refund request time frame – is there a limited time frame in which a return or exchange can be completed?
- Shipping of returned items – who pays for shipping — you or your customer?
- Will you provide a shipping label, return packaging, or codes?
- Costs – are any fees deducted from the refund?
Remember businesses do not have to give a refund for change of mind so ensure your Refund Policy reminds customer and clients that they must have a valid reason under Australian Consumer law to justify a request for a refund.
Tips to ensure your Refund Policy is effective
- make sure you have a refund policy
- keep your Refund Policy simple and uncomplicated
- ensure that you provide enough information in your Policy for customers and clients to make an informed decision to purchase from you in the first place
- keep time limitations in your Policy reasonable
- your Policy should be easily available
- understand your Refund Policy
- honour your Policy
- offer alternatives in your Refund Policy i.e replacement, similar item, a discount for a future purchase, repair of the item
- don’t complicate the process for the consumer – make it effortless and process online where possible.
Book in a Power Consultation with Shalini and get answers tailored to your business.
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Lawyer, Contract Specialist, Speaker & Advocate for Women in Business.
Drawing on more than 15 years’ experience as a lawyer and a woman in business, Shalini Nandan-Singh helps Australian service-based entrepreneurs protect their businesses and their bottom lines with empowered legal advice and contracts.
Encouraging listeners to #loveyourlegals, Shalini firmly believes that business legals should be an authentic extension of your business. Her goal is to educate audiences that, rather than confusing legalese, business legals should be an authentic extension of your business, creating positive business boundaries that support you in working with your clients with compassion and understanding.
Disclaimer: This blog is written to support business owners to consider legal requirements and issues that may arise in business. The information provided is for general and educational purposes only. It is not intended as legal advice for your individual circumstances. Please consult your lawyer for advice specific to you and your business.