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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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consumer

What happens if you return an item bought with Afterpay?

Key Takeaway

When returning an item purchased with Afterpay in New Zealand, consumer rights are primarily governed by the Consumer Guarantees Act 1993 and Fair Trading Act 1986. Afterpay is a payment method, and any issues with the item itself are resolved directly with the retailer. If a refund is due, the retailer processes it, and Afterpay adjusts the payment schedule accordingly.

Returning Items Bought with Afterpay in New Zealand

When consumers in New Zealand purchase items using a 'buy now, pay later' service like Afterpay, their rights regarding returns, faults, or misrepresentations are primarily governed by the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). Afterpay functions as a payment method, and the contract for the sale of goods or services remains between the consumer and the retailer.

Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 (CGA) provides a set of guarantees to consumers when they purchase goods and services from a supplier 'in trade' [Source: Consumer Guarantees Act 1993, s 2(1)]. 'In trade' refers to any trade, business, industry, profession, occupation, or activity relating to the supply of goods or services. These guarantees apply regardless of how the goods were paid for, including through services like Afterpay.

Key guarantees for goods include:

  • Acceptable Quality: Goods must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6]. This means they must be fit for all the 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 7(a)-(e)].
  • Fit for Particular Purpose: Goods must be fit for any particular purpose that the consumer makes known to the supplier, and for any purpose for which the supplier represents that they are reasonably fit [Source: Consumer Guarantees Act 1993, s 7(1)].
  • Match Description: Goods must correspond with any description applied to them [Source: Consumer Guarantees Act 1993, s 8].
  • Match Sample or Demonstration Model: If goods are sold by sample or demonstration model, they must correspond with that sample or model [Source: Consumer Guarantees Act 1993, s 9].
  • Reasonable Price: Where no price is agreed, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 10].

Remedies under the CGA

If goods fail to meet a guarantee, the consumer's remedies depend on whether the failure is 'minor' or 'substantial' [Source: Consumer Guarantees Act 1993, s 18(2)-(3)].

  • Minor Failure: A 'minor failure' is a problem that can be remedied easily and does not make the goods unsafe or substantially unfit for their common purpose. For a minor failure, the consumer may require the supplier to remedy the failure within a reasonable time [Source: Consumer Guarantees Act 1993, s 18(2)(a)]. If the supplier fails to do so, the consumer may have the failure remedied elsewhere and recover costs from the supplier, or reject the goods [Source: Consumer Guarantees Act 1993, s 18(2)(b)].
  • Substantial Failure: A 'substantial failure' means the goods are substantially unfit for their common purpose, unsafe, or do not match their description [Source: Consumer Guarantees Act 1993, s 21]. In the event of a substantial failure, the consumer may reject the goods or claim compensation for any reduction in value [Source: Consumer Guarantees Act 1993, s 18(3)]. If goods are rejected, the consumer may choose a refund of money paid or a replacement of identical goods [Source: Consumer Guarantees Act 1993, s 23(2)].

When a consumer rejects goods, they must notify the supplier and return the goods [Source: Consumer Guarantees Act 1993, s 20(1)]. The supplier is responsible for refunding any money paid [Source: Consumer Guarantees Act 1993, s 23(1)(a)].

Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct 'in trade' and false representations about goods or services [Source: Fair Trading Act 1986, s 9, s 13]. This means that retailers cannot mislead consumers about an item's features, price, or their return policy. The FTA applies to all aspects of the trading relationship, from advertising to the point of sale and beyond.

Key prohibitions under the FTA include:

  • Misleading or Deceptive Conduct: No person shall, 'in trade', engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9].
  • False or Misleading Representations: This includes making false or misleading representations about the standard, quality, value, grade, composition, style, or model of goods [Source: Fair Trading Act 1986, s 13].
  • Unsubstantiated Representations: A person must not, 'in trade', make an unsubstantiated representation [Source: Fair Trading Act 1986, s 12A]. An unsubstantiated representation is a claim made without reasonable grounds for believing it to be true [Source: Fair Trading Act 1986, s 2(1)].

If a retailer breaches the FTA, a consumer may seek various remedies, including orders to vary or cancel contracts, refunds, or damages [Source: Fair Trading Act 1986, s 43].

Afterpay's Role in Returns

Afterpay is a payment service and is not the seller of the goods. Therefore, consumer rights and obligations regarding the quality or description of the goods, or the retailer's conduct, rest primarily with the retailer [Source: Afterpay Terms of Service (General)].

If a consumer returns an item bought with Afterpay, the process generally involves:

  1. Contacting the Retailer: The consumer must contact the retailer where the item was purchased and follow their returns process. The consumer should explain the issue (e.g., fault, incorrect item, change of mind if the retailer allows for it).
  2. Retailer's Assessment: The retailer assesses the return based on their own returns policy and statutory obligations under the CGA and FTA.
  3. Refund Processing: If the retailer approves a refund (whether partial or full), they process it back through the Afterpay system. Afterpay is notified of the refund.
  4. Afterpay Adjustment: Afterpay will then adjust the consumer's payment schedule. If the consumer has outstanding payments for that item, they will be reduced or cancelled. If the consumer has already made payments exceeding the adjusted amount, Afterpay will refund the difference to the consumer's original payment method [Source: Afterpay Terms of Service (General)].

It is important to note that while Afterpay generally facilitates the refund once the retailer approves it, Afterpay itself does not determine whether a consumer is entitled to a return or refund for faulty goods. That determination is made by the retailer based on their obligations under New Zealand consumer law.

When to Seek Independent Legal Advice

Individuals who are unsure about their specific rights or obligations, or who are experiencing difficulty resolving a dispute with a retailer regarding an item purchased with Afterpay, are encouraged to seek independent legal advice. This information is general in nature and does not constitute legal advice. Organisations such as Community Law Centres offer free legal assistance and can provide guidance tailored to individual circumstances. Further information on consumer rights can be obtained from the Ministry of Business, Innovation and Employment (MBIE) or the Commerce Commission.

Key Resources