A question lighting up the CHOICE Community forum this week cuts right to the heart of something many Australians over 60 have experienced and never quite known how to handle: when a product fails and the retailer offers a refund, do you have to take it – even if it won’t actually cover the cost of replacing what you lost?
The case that sparked the debate involves a $5,000 Samsung OLED television that broke down after two years. The retailer tried to repair it twice and failed both times. Their solution? Refund the original $5,000 purchase price. The problem: the same television now retails for $8,000. The consumer wants a replacement, not a cheque that leaves them $3,000 short of being able to buy the equivalent product.
It is a situation more common than most people realise – and the law on it is clearer than most retailers will admit.
Under the Australian Consumer Law, if there’s a major issue with a product, you have the right to ask for your choice of a repair, replacement or refund. If you want a refund, the seller can’t make you accept a credit note, exchange or replacement.
That right runs in both directions. If you want a replacement rather than a refund, you are entitled to your choice of a replacement product or a full refund – the business does not get to make that decision for you when the fault is major.
So what counts as a major fault? A problem is major if at least one of these applies: you can’t use the item; repairs can’t be made quickly or at all; it’s unsafe; or you wouldn’t have bought the item if you’d known about the problem. The product also has a major fault if it has two or more minor failures that you wouldn’t have bought it knowing about.
A television that has failed two repair attempts and still doesn’t work is a textbook major fault. If a product has two or more minor problems that would stop someone buying it if they knew about them beforehand, it’s considered a major problem.
This is where things get genuinely interesting. A refund should be the full amount the consumer paid for the product. The business must not deduct an amount from a refund to take into account the use a consumer has had of the product.
In other words, a retailer cannot offer you a reduced refund because you used the product for two years before it failed. The refund must be the full purchase price – no depreciation, no wear-and-tear deductions.
But the refund is the original purchase price, not the current retail price. If prices have risen significantly since you bought the product, a refund may leave you genuinely out of pocket. That is exactly the situation the CHOICE forum member is facing – and it is precisely why the right to choose a replacement rather than a refund matters so much.
Seven in 10 stores misrepresented a customer’s right to a remedy in CHOICE’s shadow shop of major electrical retailers. Common tactics include telling customers to deal with the manufacturer rather than the retailer, offering store credit instead of a cash refund, suggesting the warranty has expired and therefore no remedy is available, or simply hoping the customer doesn’t know their rights and will accept whatever is offered.
Retailers can’t fob you off to the item’s manufacturer – they’re obliged to resolve your issue themselves.
It’s illegal for businesses to rely on store policies or terms and conditions which deny these rights. Signs that say ‘no refunds’ or ‘no refunds on sale items’ are unlawful.
One of the most persistent misunderstandings in Australian consumer law is that your rights expire when the manufacturer’s warranty does. They do not.
Under the ACL, retailers must offer you a refund, repair or replacement on any item that has a major problem. These rights remain in place for a reasonable amount of time following a purchase, even if the warranty has expired.
For expensive items like appliances, electronics or vehicles, this reasonable lifetime frequently extends well beyond the standard warranty period. A $2,000 refrigerator would reasonably be expected to last 7 to 10 years, not just the two-year manufacturer warranty. A $5,000 television failing after two years would almost certainly fall within the period where consumer guarantees still apply.
There is a particularly striking finding buried in CHOICE’s research that is worth knowing. Young Australians aged 18 to 34 were the most likely – 49 per cent – of any age group to ask for a refund, replacement or repair when a product did not work. Just 24 per cent of older Australians aged 65 to 75 had asked for a remedy in the same situation.
That gap is not because older Australians have fewer problems with products. It is because many simply do not know the rights they have – or feel uncomfortable pushing back against a retailer who seems confident and official.
The law is on your side. The discomfort of asserting it is worth it.
If a business refuses to honour your consumer guarantee rights, you have several options. Start by putting your complaint in writing – email is ideal because it creates a record. Clearly state the fault, what remedy you are requesting and that you are exercising your rights under the Australian Consumer Law.
If that fails, contact your state’s fair trading agency – NSW Fair Trading, Consumer Affairs Victoria, Consumer Protection WA and their equivalents in other states all provide free assistance and can facilitate negotiations with retailers. The ACCC also accepts reports and can investigate businesses that are systematically misleading consumers.
The ACCC’s free Repair, Replace, Refund Problem Solver at accc.gov.au walks you through your specific situation step by step and is a useful starting point if you are unsure of your entitlements.
You paid for something that should work. When it doesn’t, the law gives you real options – and you are entitled to use them.