“Sorry No Refunds” : A Sign of a Breach of the Australian Consumer Law

If you are a local business owner who displays a sign or notices declaring “no refunds” to customers, you may not realize it but you are acting in breach of the Australian Consumer Law. This could lead to your business being investigated by the Office of Fair Trading and serious financial penalties being imposed.

As a business owner you may wonder how that is possible. The answer is that under the Australian Consumer Law it is illegal to advertise ‘no refunds’ or similar blanket type conditions to you customers.

In some cases, customers are entitled to receive a refund for a purchase of a good or service. In other cases, a business owner is within their rights to refuse any refund to a customer. The answer on whether a refund should apply will depend on what was agreed to be provided and what was supplied in each particular transaction.

For example if a customer rents a room at a hotel for a night but decides to leave after an hour because he no longer wants to stay in the room, a hotel owner may be within their rights to refuse a refund. In that instance there is no issue with the condition of the room supplied and the hotel owner will be put to costs of cleaning the room before it can be let out again. However if the customer rented a room which was unclean, then the customer may be entitled to a refund as the room supplied was not to a satisfactory condition for a hotel room.

The problem with the use of “no refunds” signs by businesses is that they can mislead consumers of their rights under the law and put them off requesting what they could otherwise be entitled.

Last year, a Sunshine Coast hostel owner was fined $15,000.00 for advertising a “no refunds” condition to its customers. In that case, the hostel owner had the words ‘no refunds” printed on his receipt books and house rules.

Some of the hostel’s customers prepaid their accommodation with the hostel. These same customers then later decided to leave the hostel early and asked for a partial refund.

The refund was refused as the hostel owner relied on his “no refund” condition printed on the customer’s receipts and house rules. A complaint was made to the Office of Fair Trading which investigated the matter and commenced proceedings against the hostel owner before the Magistrates Court.

Our office is aware that the Office of Fair Trading has also been making enquiries into a number of complaints regarding these types of breaches of the Australian Consumer Law here in Mackay, particularly in the hospitality industry.

Local business owners should take this opportunity to review their current practices and remove any of these signs or notices from their offices. It may also be prudent to discuss with staff, the proper procedure for handling customer’s requests for refunds. Ideally this should involve a consideration of what was agreed to be provided and what was supplied in each transaction.

Should you wish to discuss this matter further, could you please contact Steven Hayles.