Refund, Replace or Repair: The Choice Isn't Always Yours.
When a customer says a product is faulty, your store policy does not decide what happens next. The law does. And the size of the problem decides who chooses the remedy.
Here is the whole point. Every product and service you sell carries automatic consumer guarantees. If you break one, the customer is owed a repair, a replacement, or a refund. For a major failure, the customer chooses between a refund and a replacement. For a minor failure, you choose, and you can simply repair the problem. These are the consumer guarantees, and no “no refunds” sign can switch them off.
Get that one distinction right and you will handle almost every refund request correctly. You keep the customer, you avoid a dispute, and you stay clear of the regulator. Miss it, and a $200 problem can grow into a $2,000 one.
So the safe habit is simple. Learn the line between a major and a minor failure. Never send a customer to the manufacturer. And act promptly, because a slow repair can hand the choice back to the customer.
That is the core message. The rest of this article is for readers who want the detail, and who want to see how it plays out in a real business.
Free Resource: Refund, Replace or Repair Decision Card
A practical decision-making tool that helps businesses determine when a refund, replacement or repair is required, respond confidently to customer complaints, and comply with Australian Consumer Law.
Digging deeper
Everything above is the bottom line. What follows is how the rule works, where owners trip up, and what it means for your business. Read on if you want to handle the next refund with confidence.
The one idea that decides every refund
The single most useful idea in consumer law is this. The size of the problem decides who is in charge of fixing it.
Split every fault into two boxes. A major failure is serious. A minor failure is not. That one split decides who chooses the remedy.
Major failure: the customer chooses. They can demand a refund or a replacement.
Minor failure: you choose. You can repair, replace, or refund, at no cost and within a reasonable time.
There is a sting in the tail for minor failures. If you do not fix a minor problem within a reasonable time, it becomes a major failure. The choice then passes to the customer. Delay is not a delay tactic. It is a way to lose control of the outcome. This split is the heart of how the consumer guarantees work in practice.
What the consumer guarantees actually promise
Before the remedy, understand the promise. The consumer guarantees are a set of automatic rights that attach to almost everything you sell. You cannot exclude them, and any term that tries to is void.
For goods, the consumer guarantees say a product must be of acceptable quality, must match its description, and must be fit for any purpose the customer told you about. For services, they say the work must be carried out with due care and skill, within a reasonable time, and fit for the purpose the customer described.
These consumer guarantees are separate from any manufacturer’s warranty. A warranty is a voluntary extra. The consumer guarantees are the law, and they often last longer than the warranty. There is no blanket two-year rule. The guarantees last for a reasonable time, judged by the product’s nature, price, and normal use.
What makes a failure “major”
A failure is major when any one of these is true:
A reasonable person would not have bought the item if they had known about the problem.
The product is unsafe.
The product or service is very different from its description or sample.
The product cannot do what it is meant to do, or what the customer asked for, and cannot be fixed within a reasonable time.
If none of these apply, the failure is minor. A loose thread on a garment is minor. A garment that falls apart on the first wash is major. The test is not the size of the item. It is the size of the problem.
For a major failure, the customer also keeps the right to claim compensation for other reasonably foreseeable loss. That consequential loss is often the larger number, which is why prompt, fair handling pays.
The remedy is yours to give, not the maker’s
Here is the point businesses get wrong most often. When a customer buys from you and the product fails, the consumer guarantees make the remedy your responsibility. It is not the manufacturer’s. You cannot tell the customer to take it up with the maker or importer.
The regulator is blunt about this. A business must not send a consumer to the manufacturer for a remedy. The obligation sits with the seller, whatever the box says.
You may well have your own claim against the manufacturer to recover your costs, and you should use it. But that is a separate transaction behind the scenes. To your customer, you are the supplier, and the consumer guarantees make you the one who fixes the problem.
A few practical rules make this workable. The customer does not need the original packaging. You can ask for proof of purchase, such as a receipt or a bank statement. A replacement must be the same type of product. A refund should be in the same form the customer paid.
The mistakes that make a small problem expensive
Two habits turn a simple fault into a legal problem.
The first is misstating the customer’s rights. A “no refunds” sign, or a line in your terms that denies a refund, is unlawful for a genuine guarantee failure. Worse, it can be a fresh breach of the law on misleading conduct, on top of the original fault. The sign does not protect you. It exposes you.
The second is delay. A minor problem you fail to fix within a reasonable time becomes a major one. The customer then gets to choose the remedy, and your cheap repair becomes an expensive refund. Speed is not just good service. It keeps the choice in your hands.
Both mistakes ignore how the consumer guarantees work. Both are easy to avoid once you know the rule, and neither has anything to do with how big or small your business is.
What this means for an allied health practice
Allied health is a useful place to see all of this at work, because a clinic sells both goods and services. The consumer guarantees apply to both.
On the goods side, think of the products a practice supplies. Orthotics, braces, compression garments, TENS units, exercise equipment, and mobility aids are all goods. A custom orthotic that does not fit its stated purpose can be a major failure. If it is, the client chooses the remedy, not the clinic. A “no refunds on custom items” sign will not change that for a genuine failure.
On the services side, the guarantee is due care and skill. This is where a careful distinction protects you. You guarantee competent care, not a cure. A client who is unhappy with an outcome you never promised is not the same as a service delivered poorly. Document the treatment plan and the expected course, and you separate an honest clinical result from a guarantee breach.
This matters more than ever right now. Allied health is Australia’s second largest health workforce, with around 300,000 professionals delivering more than 200 million services a year. Much of it runs through the National Disability Insurance Scheme, a market worth tens of billions of dollars that is now under real funding pressure. When margins tighten, a mishandled refund costs you twice, once in the remedy and once in the relationship.
The consumer guarantees do not pause because a service is funded by the NDIS or Medicare. The regulator has named NDIS providers as a compliance focus.
The same logic reaches every sector SBAAS serves. A childcare centre selling branded goods, a tradesperson installing a fixture, a consultant bundling software, and a charity running an op shop all supply under the consumer guarantees. The setting changes. The rule does not.
Thousands of complaints, one avoidable cause
Step back, and the scale becomes clear. Every year, the national and state regulators receive thousands of complaints about consumer guarantee issues. Refunds and faulty goods sit near the top of the list, year after year.
That is a lot of avoidable friction in the Australian economy. Most of it comes from the same handful of mistakes: a “no refunds” sign, a customer sent to the manufacturer, or a repair that dragged on too long. None of these mistakes is complicated. All of them are common. Each one comes from misreading the consumer guarantees.
The regulator has made consumer guarantees a stated enforcement priority, with a particular eye on electronics. That focus is a signal. The rules around refunds are not going to loosen. A business that handles them well turns a common complaint into a quiet advantage, because so many competitors still get it wrong.
The global shift behind your refund counter
Zoom out further, and a global pattern appears. Around the world, the right to have goods repaired, replaced, or refunded is getting stronger, not weaker.
Europe now requires repairability labels on some products, so buyers can see how fixable an item is before they pay. In the United States, Colorado has legislated repair rights for farm machinery and for electronic wheelchairs. Canada lets repairers bypass digital locks for legitimate fixes. Australia has introduced its first right to repair scheme for motor vehicles, and a Productivity Commission review found that our consumer guarantees are comprehensive and generally work well.
The Colorado example is worth a second look for allied health. Repair rights are now reaching the exact assistive devices that a clinic supplies. The direction of travel is clear. Consumers are gaining more power over the goods they buy, not less. A business that already handles the consumer guarantees fairly is simply ahead of where the world is heading.
How to handle the next refund request
You do not need to memorise the law. You need a short routine you can run at the counter or the front desk.
- Ask what kind of problem it is. Is the item faulty, not as described, or not fit for the purpose the customer told you? Or is it just change of mind? For change of mind, you can say no, unless you have your own returns policy.
- If it is a genuine failure, decide major or minor. Major means the customer chooses a refund or replacement. Minor means you choose, and you act promptly.
- Handle it yourself. Do not send the customer to the manufacturer. Recover your costs from your supplier separately.
- Keep it simple. No original packaging is needed. Ask for proof of purchase. Put the outcome in writing.
Do this consistently, and most refund requests end in a minute, not a month.
The Bottom Line
When something you sold goes wrong, the consumer guarantees decide the remedy, and the size of the problem decides who chooses it. Learn the major and minor line, keep the remedy with you rather than the manufacturer, and act quickly. Do that, and the refund that used to fill you with dread becomes a two minute conversation that keeps a customer for life.
How can SBAAS help
Consumer law should feel like a tool you can use, not a trap waiting to spring. At SBAAS, we help small business owners turn rules like the consumer guarantees into simple habits that protect both the customer and the bottom line.
If you would like to talk through how refunds and guarantees apply to your work, or you simply want to learn more about how we support owners across allied health, trades, early childhood, professional services, and the not for profit sector, we would be glad to hear from you.
Learn more about who we are and how we help at https://sbaas.com.au/about-us/.
General information
This article is general information only. It is not legal, financial or tax advice. Check current requirements with the relevant regulator and obtain advice for your specific circumstances before relying on this information.
Sources
Allied Health Professions Australia. (2025). Submission to the NSW inquiry into foundational and disability supports available for children and young people. https://www.parliament.nsw.gov.au/lcdocs/submissions/89893/AHPA%20submission%20to%20NSW%20Inquiry_April%202025.pdf
Australian Competition and Consumer Commission. (2025). 2025-26 compliance and enforcement policy and priorities. https://www.accc.gov.au/system/files/compliance-enforcement-policies-priorities-2025-26.pdf
Australian Competition and Consumer Commission. (2026). Repair, replace, refund, cancel. https://www.accc.gov.au/consumers/problem-with-a-product-or-service-you-bought/repair-replace-refund-cancel
Consumer Protection Western Australia. (n.d.). Returns: refunds, repairs and replacements. https://www.consumerprotection.wa.gov.au/returns-refunds-repairs-and-replacements
Leigh, A. (2025). It’s not nostalgia. It’s economics: how right-to-repair laws empower consumers. Treasury Ministers. https://ministers.treasury.gov.au/ministers/andrew-leigh-2025/articles/opinion-piece-its-not-nostalgia-its-economics-how-right-repair
Occupational Therapy Australia. (2025). OTA post-budget analysis 2025-26. https://otaus.com.au/news/ota-post-budget-analysis-2025-26
Productivity Commission. (2021). Furthering Australian consumers’ right to repair. https://www.pc.gov.au/news-media/articles/right-to-repair-consumer-goods
Eric Allgood is the Managing Director of SBAAS and brings over two decades of experience in corporate guidance, with a focus on governance and risk, crisis management, industrial relations, and sustainability.
He founded SBAAS in 2019 to extend his corporate strategies to small businesses, quickly becoming a vital support. His background in IR, governance and risk management, combined with his crisis management skills, has enabled businesses to navigate challenges effectively.
Eric’s commitment to sustainability shapes his approach to fostering inclusive and ethical practices within organisations. His strategic acumen and dedication to sustainable growth have positioned SBAAS as a leader in supporting small businesses through integrity and resilience.
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