> Business advice  > Selling to customers  > Refunds

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• When do you have to refund?
• Your rights as a trader
• The customer's obligations
• Displaying your refund policy

Businesses that willingly refund customers who return faulty goods build up both goodwill and a loyal client base.

There are some rules to follow that will ensure that your customers clearly understand your refund/ exchange policy.

Basically:

• be specific when advertising your refund/exchange policy to customers
  
• make sure your staff are quite clear about the policy
  
• do not mislead customers by advertisements stating ‘no refunds'
  
• you don't have to refund if customers simply change their minds about their purchases.

When do you have to refund?

A customer can seek redress under certain circumstances, commonly referred to as the right to repair, replacement or refund.

Signs reading ‘No Refund' are illegal because they mislead customers about their rights. If you would like advice regarding your refund policy, contact the Office of Consumer and Business Affairs on (08) 8204 9777 or the nearest country office on 131 882.

In essence, a refund is in order if the goods:

• have a fault that the customer could not have known about at the time of the purchase
  
• do not do the job the customer was led to believe they would
  
• do not match the sample they were shown
  
• aren't as they were described.

Sometimes you may offer to repair, exchange or provide a credit note. However, the customer does have the right to insist on a refund. You may wish to check with the Office of Consumer and Business Affairs regarding a particular refund.

Your rights as a trader

You don't have to provide a refund if:

• no proof of purchase is offered. Receipts are not the only proof of purchase - a witness to the purchase or a bank statement could suffice
  
• the customer simply has a change of mind
  
• the goods have been damaged after purchase.

The customer's obligations

If customers ask for a refund, they should:

• report the fault and return the goods within a reasonable time
  
• provide details of the fault
  
• provide proof of purchase.
  
• stop using the faulty goods until they can be returned
  
• look after the goods until they are returned.

If the goods are not returned within a reasonable time customers should state the remedy they want, choosing between repair and replacement, but not including a cash refund.

If your customers have bought on credit contract, they are not entitled to a cash refund. They can ask for a refund of deposit or of any payments they have made together with a cancellation of the outstanding balance or they can ask for the value of any items they traded-in.

If the goods have been used for a reasonable time, customers may have the right to a part refund or repair only.

Displaying your refund policy

The Office of Consumer and Business Affairs has produced a refund rights sign outlining the minimum requirements of the legislation for display in your premises. Copies can be downloaded here or requested by telephoning 8204 9516.

Remember, however it may be wise to consider today's competitive marketplace when adopting a refund policy. Many businesses choose to offer a refund to customers regardless of the requirements of the legislation.

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