Common misconceptions regarding consumer rights

Consumers often find themselves frustrated after attempting to return a faulty product to a retailer, only to be refused on the basis of store policy, expired warranty or lack of responsibility.

The Australian Consumer Law (ACL) which governs this area of the law is frequently misunderstood and is increasingly becoming the target of regulatory bodies such as the Australian Competition and Consumer Commission (ACCC).

A basic knowledge of the rights given by the ACL can go a long way to ensuring that an adequate remedy can be obtained for faulty products.

The right to a refund

Under the ACL consumers are entitled to a refund from the retailer if a product contains a “major failure”. A product contains a major failure where:

• no reasonable person would have bought it had they known about the problem;
• it is significantly different from any description, sample or demonstration model shown;
• it is substantially unfit for the normal purpose the product is used for;
• it is substantially unfit for a purpose the retailer said the product can be used for or which the consumer notified the retailer it would be used for ; or
• it is unsafe.

If the failure is not a major failure, the retailer can choose to provide a free repair or replacement within a reasonable time, instead of a refund.

The refund provisions of the ACL cannot be excluded or denied and retailers who display signs or notifications to the following effect are in breach of the ACL:

• “No refunds”
• “No refunds after [xx] days”
• “No refunds on sale items”
• “Exchange or credit note only”

Extended warranties

The ACL requires that products be of acceptable quality throughout their reasonable life. Often, this will be a longer period than what is offered under many extended warranties offered by retailers.

Consequently, extended warranties may be worthless if they offer nothing more than what is provided by the ACL, as consumers may still approach the retailer for a remedy under the ACL even after the extended warranty has expired.

For example, a 12 month extended warranty offered for a television is unlikely to provide any further protection than the ACL does, it being reasonable to expect that the television would last for a period significantly longer than 12 months anyway.

Consumers should consider the terms and conditions of any extended warranty carefully and ask the retailer what benefits the warranty provides in addition to those provided by the ACL.

Referrals to manufacturers

Retailers cannot refuse to help with defective products by directing consumers to approach the manufacturer or importer of the product directly.

Subject to an exception relating to the availability of spare parts and repair facilities, consumers are able to seek remedies from the retailer for defective products.