Repair, replace or refund? Your obligations to your customers

| August 5, 2018

As a business owner, it is your responsibility as well as your interest to prioritise the needs of your customers. The services you offer should be of appropriate quality and goods should be in 100% working condition, have no faulty parts and be safe for your consumers.  Firms with loyal customers and excellent reviews win those plaudits by keeping their clients happy.

However, there will be times when a customer will go back to your store, calls your hotline or send an email expressing dissatisfaction with goods or services they have purchased.  There will also be times when a client claims their goods are faulty or will send back items indicating they no longer want it.

No owner wants to hear these things, but it happens, and you must abide by the rules set by the Australian Consumer Law when dealing with such claims.

What is Australian Consumer Law?

In Australia, the ACCC – the Australian Competition and Consumer Commission – is the agency charged with enforcing the Competition and Consumer Act 2010 (CCA). The CCA includes the Australian Consumer Law (ACL), a piece of national legislation that protects a consumer’s rights and is applied to all business in all states and territories in Australia.

What are the Rights and Obligations of Consumers?

All goods and services must be of good quality, meaning they are safe, in working order and perform the functions they purport to provide.  They must also be free from hidden charges.

Australian Consumer Law outlines the circumstances under which businesses selling goods and services must provide a remedy to customers with a complaint, ranging from repair to refund or replacement.

When to Repair, Replace or Refund?

If the service or goods bought by the consumer fail to meet these standards, they are entitled to a replacement, a repair or a refund at the discretion of supplier, depending on the circumstances.  In the case of minor issues, the seller can choose the repair option, but, if the process would take too much time, the buyer can take it elsewhere for repair and ask for compensation for the fee.

Some of the circumstances that prove the consumer’s problem is a major one include the goods being unsafe for the consumer, the product being different from the description stated by the seller and the product failing to function for its conventional purpose.

Business owners have a legal duty to abide by all of the rules in Australian Consumer Law.  Sellers are under a clear obligation to provide a timely and satisfactory remedy to solve an issue in a reasonable time frame.  One cannot refuse to deal with the customer if they have grounds for a complaint, and you cannot tell them to deal with the manufacturer instead.

Services, on the other hand, have a different set of rules and responsibilities.  Sellers usually provide an agreement which states what the service encompasses, the date they will give it, and similar details which the buyer must agree to.  However such agreements do not give carte blanche to offer poor services to customers.

Businesses must ensure that every service they offer meets the following criteria.  Due care and appropriate skill should be used when rendering the service and the service must be fit to perform the function stated, implied or expressed by the seller. The seller must also provide the service at a ‘reasonable time and date’, if no time is specified.

If the seller fails to abide by these criteria or reasonable consumers’ guarantees, the action taken will depend on the gravity of the issue. For minor problems, a business has the right to remedy the problem before a consumer can demand an immediate refund, however, for significant issues, the consumer can choose between full compensation for the value of services which were not provided or the cancellation of the service agreement and a full refund.  The circumstances that apply to services are the same as those in goods.

It is important to note that the consumer guarantees are not applicable to any good or service typically used for business purposes that costs more than $40,000. Of course, there will be times when a business can refuse a refund, replacement or repair.

There may be times when a consumer will claim compensation for injuries or damages caused by a product or service you provide; this is one of the reasons why every business needs to have insurance and reliable Business Brokers to assist them. This group of professionals will help you make the best out of your business to ensure a good future for both your business and your customers.