Business Law

20,000 complaints – but is the customer always right?

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On 3 January 2017 the ACCC released statistics that more than 20,000 shoppers complained about ‘consumer guarantees’ in 2016. With Christmas presents now unwrapped and gift cards spent during the stocktake sales, if a good is faulty what obligations do businesses face?

The Australian Consumer Law imposes non-excludable consumer guarantees on the sale of goods and the provision of services; these are in addition to any express warranties a business might give separately.

Essentially goods need to be safe, free from defects and do everything that they are commonly used for. This applies even if they are discounted or second-hand goods. Where there is a breach of the consumer guarantees, businesses are liable to repair the goods, replace the goods with goods of an identical type or refund any money paid by the consumer.

But faulty goods are not always the business’ problem. Manufacturers are subject to their own set of guarantees and this article doesn’t contemplate inherent defects which may not manifest for some time due to a faulty design (those are tales for another day). A business has rights to defend its goods and may not be liable in certain circumstances. Consumers may not be entitled to a remedy if :

  • the business warned the consumer that a good had a particular defect and the customer purchased it anyway; or
  • the consumer used the good for an unusual purpose (not one that the good is commonly used for) and either they didn’t alert the business to their intended use, or they did but the business advised it would not fulfil that particular purpose; or
  • the consumer tries to return the goods after an unreasonable amount of time after the failure became apparent.

Businesses should be on the front foot when it comes to consumer guarantees – be clear about what your products can or can’t do, train your staff about what representations they can make about your products and don’t try to be ‘tricky’ about refunds – it will only lead to complaints at best and possibly a law suit and potential reputational damage.

Notwithstanding the large number of complaints, common sense should really prevail. Consumer guarantees are there to protect consumers from being manipulated into thinking they have no rights; but businesses do have defences to claims where they have done the right thing.

So is the customer always right? Customarily yes but each case turns on its facts. Knowing what rights your business has is a good start; managing your customer relationship is even better.

Mark Love, Legal Director, Business Law
9th Floor, Canberra House, 40 Marcus Clarke Street, Canberra ACT 2601
E: [email protected]
T: 02 6274 0810

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