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TL;DR
Under Australian Consumer Law, retailers don’t have to offer a refund just because a customer changes their mind. Refunds are only required when a product is faulty, unsafe, or not as described under consumer guarantees. However, if you choose to offer a change of mind refund policy, you need to honour it exactly as it’s written, since it becomes part of your promise to the customer. It’s also important to avoid misleading signage such as “no refunds” notices, as these don’t reflect the rights customers have under Australian Consumer Law and can breach the rules.
One of the most misunderstood areas is change of mind refunds. Customers often assume they’re always entitled to a refund, but that’s not actually how the law works.
Instead, Australian Consumer Law draws a clear line between products that are faulty (covered by consumer guarantees) and situations where a customer simply changes their mind. Knowing the difference helps you stay compliant and avoid unnecessary refund pressure.
Change of mind refund obligations for retailers
Under Australian Consumer Law, retailers are not required to offer a refund if a customer simply changes their mind. In these cases, the product is not faulty, it just no longer suits the customer.
However, many businesses still choose to offer change of mind refunds as part of their customer experience. If you do this, it becomes part of your returns policy, and you need to follow it exactly as advertised. Clear, upfront communication is important so customers understand what applies before they buy.
Consumer guarantees under Australian Consumer Law
Consumer guarantees are the legal rights that automatically apply to products and services sold in Australia.
They ensure that products must:
- Be of acceptable quality
- Match their description
- Be fit for purpose
- Work as expected
If a product fails to meet any of these guarantees, the customer is legally entitled to a remedy. The key difference here is that consumer guarantees apply when something is wrong with the product itself, not when a customer simply changes their mind.
When retailers must provide a refund
Retailers are legally required to offer a refund, repair, or replacement when a product fails to meet consumer guarantees under the Australian Consumer Law (ACL).
This includes situations where the product is:
- Faulty or defective
- Unsafe
- Not as described
- Not fit for purpose
In these cases, the retailer cannot rely on their own refund policy to refuse a claim. Australian Consumer Law always overrides store policies.
Our guide to faulty vs change of mind returns explains how major and minor failures work and which remedy applies to each.
Refusing refunds when there is no product fault
Retailers can refuse a refund if the product is not faulty and the customer has simply changed their mind.
For example, if the item is in perfect condition, matches the description, and functions as expected, there is no requirement under Australian Consumer Law to provide a refund.
The key distinction is whether the issue relates to a consumer guarantee. If it doesn’t, the refund decision sits with the retailer.
“No refunds” policies and what is allowed in Australia
A blanket “no refunds” policy is not allowed under Australian Consumer Law.
Even if a retailer does not offer change of mind refunds, they must still comply with consumer guarantees. This means customers still have rights if a product is faulty or not as described.
Any signage or policy that suggests customers have no refund rights at all can be considered misleading and may breach ACL requirements.
What an Australian refund policy needs to say
Whether you call it a refund policy or a returns policy, it should cover two different things and keep them clearly apart.
The first is what customers are entitled to under the consumer guarantees. Your policy can’t remove or limit those rights, so say plainly that customers can get a repair, replacement or refund when a product is faulty, unsafe or not as described. Wording like “no refunds on sale items” is a problem if it reads as though it applies to faulty goods too.
The second is your change of mind offer, if you have one. This is where your own rules live: the return window, the condition items need to be in, any excluded products, and whether you give a refund, an exchange or store credit. Customers have no legal right to any of this, so you can set it however suits your business, as long as you stick to it. Our post on refund timeframes and store credit covers where the law does limit those choices for faulty goods.
Keep both parts easy to find before checkout, and use the same wording on your website, your order confirmation emails and your returns portal.
If you’d rather start from a draft, our return and refund policy template keeps both parts separate and notes what you can and can’t say.
Structuring a change of mind returns policy
If a retailer chooses to offer a change of mind returns option, it should be set up in a clear, simple way that customers can easily understand before they buy.
Step 1: Set your return timeframe
Decide how long customers have to return an item, such as 14, 30, or 60 days. Make sure this is clearly stated across your website, especially on product pages and at checkout.
Step 2: Define item condition rules
Be clear about what condition items need to be in to qualify for a return. For example, whether items must be unused, unworn, and in original packaging.
Step 3: Add any exclusions
Outline any products that cannot be returned under change of mind, such as sale items, final clearance stock, or hygiene-related products.
Step 4: Explain the return process
Make it easy for customers to understand how to start a return, whether that’s through a returns portal, email, or customer support team.
Step 5: Apply the policy consistently
Once your policy is published, it needs to be followed consistently. Any conditions you set should be applied fairly to all customers.
Setting this up in Refundid
If you run returns through Refundid, each of these steps is a setting rather than a page of fine print. You set the return window, the condition rules and any excluded products once, and the returns portal applies them to every customer the same way. Faulty returns can be set up differently from change of mind returns, with photo uploads, free return shipping and a review step, and your policy can point faulty claims that fall outside your return window to your support team.
If you’d like to see how it would work for your store, book a demo.
Major retailers crack down on returns policies | 9 News Australia
This is general information only and should not be considered legal advice. If you’re not sure how the law applies to your business, talk to a lawyer.
