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Don’t Lie to Your Customers About Refunds

The ACCC has issued legal proceedings in the Federal Court of Australia against Booktopia. They allege that Booktopia have, on multiple occasions, made false or misleading representations to customers about their rights to a refund. This could see Booktopia paying significant fines.

Make sure your business uses this case as a warning and a prompt to update your refund policy.

The Law

As a business, you need to know your obligations to offer a refund. You must also be careful to accurately convey this to your customers. If you misrepresent your obligations or lie to your customers, you will be engaging in misleading and deceptive conduct under section 18 of the Australian Consumer Law. Section 18 covers a large scope of conduct in business and acts as a catch all provision.

What most people don’t know, is that incorrectly informing customers of their rights and remedies will also be a breach of section 29 of the Australian Consumer Law. Each of these provisions can lead to fines and serious cost consequences in court.

The Case Against Booktopia

The ACCC allege that Booktopia have engaged in two main breaches of the Australian Consumer Law, by:

  • Informing customers that no refunds would be given in any circumstances for eBooks and digital products; and
  • Informing customers that they were only entitled to a refund for other products if they notified Booktopia of any fault, damage or incorrect product within two days of delivery.

If the ACCC can prove Booktopia conveyed that information to customers, they will likely succeed in their case. The most egregious breach is excluding customers from any refunds for eBooks – this clearly misrepresents that the customer cannot even get a refund if the eBook is faulty.

Your Refund Policy

Make sure you check your refund policy for any mistakes and make a reminder to review it every 12 months.

Whilst it is generally ok for your refund policy to be silent on some issues, make sure that:

  1. There is no blanket ‘no refund’ policy. Your business legally has to offer a refund for any faulty or defective goods;
  2. You can choose whether or not to accept change of mind refunds or exchanges from customers;
  3. You should encourage your customers to look at the Australian Consumer Law to be aware of their rights and/or say that you offer refunds or exchanges in accordance with the Australian Consumer Law;
  4. Specify a timeframe within which the goods must be returned. This timeframe must be reasonable;
  5. Exclude (as far as possible) your business’ knowledge of any specific purpose which the customer is going to be using the goods for.

By implementing these changes and regularly reviewing your refund policy, your business will be less likely to breach the Australian Consumer Law and be targeted by the ACCC. For further advice, or to make arrangements for us to review and update your refund policy, please contact one of our experienced commercial lawyers at Taurus Legal Management on (03) 9481 2000 or info@tauruslawyers.com.au.

Posted by Taurus Legal Management