Refund policies are an essential part of any business’s operations. They help establish trust and confidence with customers by providing assurance that they can return a product or service if it fails to meet their expectations. In Australia, there are specific rules that businesses must follow when creating their refund policies. In this article, we will discuss the top ten mistakes that Australian businesses make in their refund policies and how to avoid them.
Mistake #1: Not Clearly Stating the Refund Policy
One of the most common mistakes a business can make is not clearly stating their refund policy. This mistake can lead to confusion and frustration for customers who are unsure about how to return a product or service. To avoid this mistake, you should make sure that their refund policy is prominently displayed on their website and or physical store.
Mistake #2: Setting Timeframes for Return of Faulty Goods
As was recently demonstrated in the Booktopia case if a good is faulty a consumer has a reasonable amount of time to return it. What is reasonable will return on the nature of the goods.
For example, it would not be reasonable to put in your refund policy for your online clothing store that faulty goods must be returned within 2 business days of receipt. If you do you will be in contravention of the Australian Consumer Law. The better approach is to ask that customers promptly return damaged goods.
If you choose to offer change of mind (not for faulty goods) you can set a timeframe for the return of these items – however faulty goods fall into a different category. Make sure you draw this distinction in your returns policy carefully.
Mistake #3: Requiring Original Packaging or Tags
Some businesses require that faulty or damaged products be returned in their original packaging or with their original tags attached. If the goods are faulty, the ACL says that a customer does not need to return the products in its original packaging. You are however entitled to ask for proof of purchase.
Mistake #4: Offering change of mind
Did you know as a retailer you are not legally required to offer returns or exchanges if a customer simply changes their mind? It is totally fine to state in your refund policy that no refunds will be given if you simply change your mind!
While this is the case legally, many businesses do choose to offer refunds or exchanges for change of mind (particularly when selling clothing or apparel online) as a additional level of protection for customers who may not have a chance to try on the garment.
Mistake # 5: Not training staff
Finally, you should ensure that their staff are trained on your refund policies. Staff members who are not familiar with the policy may provide incorrect information to customers, leading to frustration and confusion and possibly a breach of the Australian Consumer Laws.
Refund policies are an essential part of any business’s operations, and Australian businesses must comply with specific guidelines and regulations. Businesses can establish trust and confidence with their customers and maintain a positive reputation in the industry if you have a clearly displayed refund policy which is compliant with the Australian Consumer Law.