Under the Australian Consumer Law, products must be of acceptable quality, match their description and be fit for any purpose you were told about, and services must be done with acceptable care and skill. These consumer guarantees are automatic, and if one isn't met the customer is entitled to a repair, replacement, refund or cancellation depending on how serious the problem is.
If you sell to customers in Australia, these guarantees sit underneath every sale you make, and the ACCC is clear that nothing you say or do can take them away. That includes your returns policy, your terms and conditions and the sign by the till. Here's how the rules work in practice, from the ACCC's own guidance for business.
The guarantees you can't contract out of
| Guarantee | What it means |
|---|---|
| Acceptable quality | Safe, durable, free from defects, acceptable in appearance and finish, and does what similar products are commonly used for |
| Fit for a stated purpose | If the customer told you, or you advertised, a particular use |
| Matches the description | Whether the description was written or spoken |
| Matches the sample or demonstration model | Same quality and features as what they were shown |
| Extra promises (express warranties) | Any promise about quality, condition or performance must be met |
| Spare parts and repairs | The manufacturer or importer must provide them for a reasonable time, unless you said otherwise at the time of sale |
| Services: due care and skill | At least as good as a competent provider with average skills and experience |
| Services: reasonable time | Delivered within a reasonable time if no date was agreed |
There's no fixed rule for how long a product should last. The ACCC lists questions to weigh up, such as what it cost compared with similar products, what claims were made, how it was used and whether it was new or second-hand.
Major problem or minor problem?
The remedy depends on how serious the problem is. The ACCC says a product has a major problem if it's unsafe, very different from the description or sample, has a serious problem (or several smaller ones) that would have stopped someone buying it, or can't be used for its normal or stated purpose and can't easily be fixed within a reasonable time.
| Problem | What the customer is entitled to |
|---|---|
| Major problem with a product | Their choice of a refund or a replacement of the same type, or to keep it with compensation for the drop in value |
| Major problem with a service | Cancel and get a refund (less a reasonable amount for work done), or keep the contract at a lower price |
| Minor problem with a product or service | You must fix or repair it for free; you can choose to offer a refund or replacement instead |
| Minor problem you can't or won't fix in a reasonable time | Repair elsewhere at your cost, a refund or replacement, or compensation |
Two rules surprise business owners. A refund for a major problem should be the full amount paid, and the ACCC says you must not deduct anything for the use the customer has had. And refunds go back in the same form as the original payment unless you both agree otherwise, so a store credit isn't a refund unless the customer chooses it.
No refunds signs are illegal
The ACCC says businesses can't take away these rights by displaying a no refunds sign, saying refunds aren't available after a certain number of days, saying they aren't responsible for problems, or suggesting a customer must buy an extended warranty to keep their rights. It names policies such as no refunds or exchanges on sale items as illegal where they deny these rights. You also can't send the customer to the manufacturer: the ACCC says businesses are responsible for resolving problems with products they sell.
What the guarantees don't cover is change of mind. Customers aren't entitled to a remedy if they simply changed their mind, found it cheaper elsewhere, caused the problem by misuse, or knew about the problem before buying. But if you have a change of mind policy, the ACCC says you must follow it.
Your business customers are covered too
This is the insight most sellers miss. The ACCC says a business can be a consumer too. A product or service bought for business use is covered when it costs less than $100,000 including GST (as of October 2026), or is commonly bought for personal or household use, or is a vehicle or trailer used mainly to transport goods on public roads. The exceptions are goods bought to resell, to use up in production or manufacturing, or to repair or treat other goods. So if you sell software, equipment or services to other small businesses, the guarantees can still apply.
Returns, postage and changes to services
- Customers return items that can be posted or easily returned.
- You pay for collecting or shipping large, heavy or hard to remove items, such as beds or installed appliances.
- If you confirm a fault, you repay the customer's reasonable return costs.
- If there's no fault, you can charge collection and inspection costs, but only if you gave a reasonable estimate first.
- If you change a service you agreed to provide, such as moving in-person lessons online, tell customers early, and for a material change get their consent or cancel and refund.
If the fault was the manufacturer's, the ACCC says the manufacturer must reimburse you for the cost of the remedy. Keep records so you can claim it back. If you're setting up in Australia, whether you need an ABN and registering for GST are the admin steps that usually come first.
My verdict
Write your returns policy as a promise to meet the guarantees, not a list of exclusions: fix minor faults quickly, offer the customer's choice of refund or replacement for major ones, never deduct for use, and take down any sign that says no refunds. And remember your business customers under $100,000 have the same rights as everyone else.
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Selling in the UK too? See our Consumer Rights Act guide for the equivalent rules there.
Frequently asked questions
What is the Australian Consumer Law?
It's the national law that gives customers automatic consumer guarantees, such as products being of acceptable quality and services being provided with due care and skill. The ACCC enforces it.
Are no refund signs legal in Australia?
No. The ACCC says businesses can't take away consumer guarantee rights by displaying a no refunds sign or saying refunds aren't available after a set number of days.
Does a business have to refund for change of mind in Australia?
No. The consumer guarantees don't cover change of mind, but the ACCC says if a business has a change of mind policy it must follow it.
What is a major problem under Australian Consumer Law?
The ACCC says a product has a major problem if it's unsafe, very different from its description or sample, has a problem that would have stopped someone buying it, or can't be used for its purpose and can't easily be fixed in a reasonable time.
Can I deduct for use from a refund?
Not for a major problem. The ACCC says the refund should be the full amount and businesses must not deduct for the use the customer has had.
Do consumer guarantees apply to business purchases?
Yes, when the product or service costs less than $100,000 including GST, is commonly bought for personal use, or is a goods-carrying vehicle, unless it's bought to resell, use in production or repair other goods.
Can I tell customers to contact the manufacturer?
No. The ACCC says businesses must not tell consumers to go to the manufacturer for a remedy.
