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consumer

Can a store legally have a "No Refunds" sign?

Key Takeaway

In New Zealand, stores cannot legally display blanket "No Refunds" signs if goods are faulty or do not meet consumer guarantees. Such signs may mislead consumers about their rights under the Consumer Guarantees Act 1993 and could breach the Fair Trading Act 1986. Consumers are generally entitled to a refund, repair, or replacement for faulty items, but not typically for a change of mind.

Can a Store Legally Have a "No Refunds" Sign in New Zealand?

In New Zealand, the legality of a store displaying a "No Refunds" sign is governed by the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). These acts establish rights for consumers when purchasing goods and services, and businesses cannot contract out of these fundamental protections.

The Consumer Guarantees Act 1993 (CGA)

The CGA is a consumer protection law that ensures goods and services supplied to consumers meet certain standards [Source: Consumer Guarantees Act 1993, Preamble]. A consumer is defined as a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, and not for the purpose of resupplying them in trade, or consuming them in the course of a process of production or manufacture, or repairing or treating other goods or fixtures on land [Source: Consumer Guarantees Act 1993, s 2].

Under the CGA, goods must meet several consumer guarantees, which include:

  • Acceptable quality: Goods must be fit for all purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 6].
  • Fit for a particular purpose: If a consumer makes known a particular purpose for which they are acquiring the goods, and relies on the supplier's skill or judgment, the goods must be fit for that purpose [Source: Consumer Guarantees Act 1993, s 7].
  • Match description: Goods must correspond with any description applied to them [Source: Consumer Guarantees Act 1993, s 8].
  • Match sample or demonstration model: Goods must correspond with any sample or demonstration model shown to the consumer [Source: Consumer Guarantees Act 1993, s 9].
  • Reasonable price: If no price is set, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 10].
  • Availability of spare parts and repair facilities: The manufacturer must take reasonable action to ensure that facilities for the repair of the goods and spare parts are reasonably available for a reasonable period after the goods are supplied [Source: Consumer Guarantees Act 1993, s 12].
  • Honour express guarantees: The manufacturer or supplier must comply with any express guarantee given [Source: Consumer Guarantees Act 1993, s 13].

Remedies for Failure to Comply with Guarantees

If goods fail to comply with one or more of these guarantees, the consumer is entitled to a remedy. A remedy can include repair, replacement, or a refund, depending on the nature of the failure:

  • Minor failure: If the failure can be remedied, the supplier must remedy it within a reasonable time. If the supplier fails to do so, the consumer can have it remedied elsewhere and recover the reasonable costs from the supplier, or reject the goods [Source: Consumer Guarantees Act 1993, s 18].
  • Substantial failure: If the failure is of a substantial character (meaning it cannot be remedied or is a significant departure from the guarantee), the consumer can reject the goods or obtain compensation for any reduction in value [Source: Consumer Guarantees Act 1993, s 21]. Rejecting the goods gives the consumer the choice of a refund or a replacement of identical type [Source: Consumer Guarantees Act 1993, s 23].

Crucially, any attempt by a supplier to avoid their obligations under the CGA is generally unenforceable [Source: Consumer Guarantees Act 1993, s 43]. This means a "No Refunds" sign cannot legally override a consumer's right to a refund if the goods are faulty or do not meet a consumer guarantee.

The Fair Trading Act 1986 (FTA)

The FTA prohibits misleading and deceptive conduct in trade [Source: Fair Trading Act 1986, Preamble]. Businesses are legally required not to mislead consumers [Source: Fair Trading Act 1986, s 9].

A sign stating "No Refunds" may be considered misleading because it implies that consumers have no right to a refund under any circumstances, even when their rights under the CGA (such as for faulty goods) would otherwise apply [Source: Fair Trading Act 1986, s 9]. Furthermore, the FTA specifically states that a person must not, in trade, make a false or misleading representation concerning the existence, exclusion, or effect of any condition, warranty, guarantee, right, or remedy [Source: Fair Trading Act 1986, s 13(i)]. A "No Refunds" sign could be seen as making a misleading representation about a consumer's right to a remedy.

The Legal Position on "No Refunds" Signs

In New Zealand, a store cannot legally refuse a refund, repair, or replacement if goods are faulty, not fit for purpose, or do not meet other consumer guarantees set out in the Consumer Guarantees Act 1993 [Source: Consumer Guarantees Act 1993, s 18, s 21, s 23]. A sign that says "No Refunds" is unlikely to be legally effective in such situations.

Such a sign, if displayed in a blanket manner, may also be considered misleading or deceptive under the Fair Trading Act 1986, as it can falsely represent to consumers that they have no right to a refund, even when they do under the CGA [Source: Fair Trading Act 1986, s 9, s 13(i)].

However, it is important to note that New Zealand law does not generally provide a right to a refund simply because a consumer has changed their mind about a purchase and the goods are not faulty. In such cases, a store's "No Refunds" policy for change of mind would be enforceable, unless the store has voluntarily offered a more generous returns policy [Source: The Consumer Guarantees Act 1993 does not establish a right to return goods solely due to a change of mind]. To avoid being misleading, any such sign would need to clearly state that it only applies where goods are not faulty.

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights or obligations regarding consumer law or to address a dispute with a trader are advised to consult with an independent legal professional. Further assistance can also be sought from official bodies such as the Commerce Commission or by contacting Community Law Centres for free legal advice.

Key Resources