For businesses / Refund policies
Your refund policy: what a business can and cannot say
A refund policy can give customers more than the law requires. It cannot take away what the law already gives them. Here is what a lawful refund policy needs.
In short
- The consumer guarantees apply whatever your refund policy says. A term that tries to exclude them is void.
- You do not have to give refunds for a change of mind. If your policy offers them, apply it as written.
- Signs such as “No refunds” can mislead customers about their rights, and that can lead to penalties.
- If you give a warranty against defects, it must include wording set by law.
What the law requires of a refund policy
When you sell goods or services to a consumer, the consumer guarantees apply automatically. A term in your refund policy, terms or contract that tries to exclude, restrict or modify them is void.1
For a major failure, the customer chooses a refund or a replacement. For a minor failure, you can choose to repair the goods within a reasonable time, or to replace or refund them.2 When a customer rejects goods, the refund must be money: a credit note or store credit is not enough.3 Customers can claim whether or not the goods are in their original packaging.4
Change of mind and your refund policy
There is no legal right to a refund for a change of mind. You can offer one, with conditions such as a time limit or goods returned unused. If your refund policy offers change-of-mind refunds, apply it as written: a policy that promises more than you deliver can itself be misleading.
Words to avoid in a refund policy
A business must not make a false or misleading representation about a customer’s rights or remedies, including the consumer guarantees.5 Signs and policies like these can breach that rule:
- “No refunds”
- “Exchange or credit note only”
- “Faulty goods must be returned to the manufacturer”
- “Sale items cannot be returned”
Wording that works
“No refunds for change of mind” is lawful, if it is true of your policy. It helps to add: “This does not affect your rights under the Australian Consumer Law.”
Warranties against defects
A warranty against defects is a promise that you will repair, replace or refund goods or services if they are defective. If you give one, it must be in a document that is transparent and must state, among other things:6
- what the customer must do to claim, and what you will do;
- your name, business address, phone number and email address;
- the warranty period and how to make a claim;
- who pays the cost of a claim; and
- that the warranty is in addition to the customer’s other rights.
For goods, the warranty must include this text:7
Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure
Returns, online sales and your refund policy
The same rules apply to online sales. If rejected goods cannot be returned without significant cost to the customer, for example because of their size or how they are attached, you must collect them within a reasonable time at your own expense.8 A customer cannot reject goods that were damaged after delivery for reasons unrelated to their condition when supplied.9
Recovering your costs from the manufacturer
If you remedy a failure that comes from the goods themselves, for example because they were not of acceptable quality, the manufacturer must generally indemnify you for your costs. You have 3 years to start that claim, counted from the day you first paid or otherwise met the customer’s claim, or the day the customer started proceedings against you, whichever is earlier.10
Questions about your refund policy
Have another question? Phone 1800 776 529 or send us a message.
For a change-of-mind return, yes, if your refund policy said so before the sale. When a customer rejects goods for a major failure, you must refund the money paid, so you cannot deduct a fee.2
Often, yes. A business can be a consumer under the Australian Consumer Law, depending mainly on the price and the type of goods or services. See Consumer guarantees explained.
No. Your obligations to your customer do not depend on your supplier. In many cases you can then recover your costs from the manufacturer.10
When to get help
If you are rewriting your refund policy or warranty, or a customer or regulator has questioned it. A review of your terms, refund policy and warranty wording is $1,980, including GST.
The law
- ACL s 64(1).
- ACL ss 259(2), (3), 263(4).
- ACL s 263(5).
- ACL s 259(7).
- ACL s 29(1)(m).
- ACL s 102(1); Competition and Consumer Regulations 2010 (Cth) reg 90(1).
- Competition and Consumer Regulations 2010 (Cth) reg 90(2).
- ACL s 263(2)(b), (3).
- ACL s 262(1)(c).
- ACL s 274(2), (4).
Last reviewed: November 2026. This page is general information about Victorian and Commonwealth law as at November 2026. It is not legal advice about your circumstances.
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