Understanding Refunds, Exchanges, and Your Rights Under the Consumer Guarantees Act (CGA)
Retailers often face questions from customers about refunds, exchanges, and their rights under consumer law. Understanding your obligations—and your options—under the Consumer Guarantees Act (CGA) can help you handle these situations confidently and fairly. Furthermore, having a clear refund and exchange policy can help manage your customers’ expectations and avoid confusion or disputes.
Why having a refund and exchange policy is helpful — and how to communicate it
Having a clear refund and exchange policy is beneficial for both your business and your customers. Here’s why:
Builds trust and confidence
Customers are more likely to buy from you if they know they have options in case something goes wrong or they change their mind.
Reduces disputes
A well-defined policy helps manage expectations and can prevent misunderstandings or complaints.
Supports staff decision-making
Your team will feel more confident handling returns and exchanges when they have clear guidelines to follow.
How to communicate your policy effectively
When can a consumer ask for a remedy?
A consumer can ask for a remedy under the Consumer Guarantees Act (CGA). Consumers might be able to get a repair, replacement or refund if:
- products or services don’t do what they are meant to or are defective
- products or services are different from their description, for example, on packaging or in advertising
- products don’t match the sample or model they were shown
- products or services are not reasonably fit for a particular purpose that you informed the consumer about
- you did not have the right to sell the product
- delivery is late or never arrives, or products are damaged in transit.
As a retailer you have the right to:
- refuse a consumer’s offer to buy a product or service (so long as you don’t breach the Human Rights Act or the Commerce Act)
- ask questions about and inspect any product or service a consumer says does not meet the CGA guarantees
- decide to repair, replace or refund a product — or fix a problem with a service if it can be fixed
- refuse a refund or any other remedy if a consumer changes their mind about a product or service
- refuse a refund or any other remedy if the consumer damages the product after the sale.
Do I need to offer a store credits for a ‘change of mind’ return?
You are not obliged to offer a remedy for ‘change of mind’ returns, but many retailers choose to do so. You may choose to offer a store credit rather than a refund or exchange for ‘change of mind’ returns.
If you do offer this for change of mind returns, we recommend that you have a change of mind policy that outlines the exchange period, what the consumer is entitled to when they change their mind, and expiry dates for any store credit you provide.
Want more advice?
If you have any questions, contact our Advice Service on 0800 472 472 (1800 128 086 from Australia) or email [email protected].
