Compliance Guide · Updated 18 May 2026
Australian Consumer Law for Retailers, Statutory Guarantees, Refunds, Signage
A plain-English guide to Schedule 2 of the Competition and Consumer Act 2010 (the ACL), the statutory guarantees that cannot be excluded, the major-vs-minor failure decision, what signage is and isn't allowed, and recent ACCC enforcement.
The Foundation
Four statutory guarantees that cannot be excluded
Schedule 2 of the Competition and Consumer Act 2010, known as the Australian Consumer Law (ACL), imposes four core statutory guarantees on the sale of goods. They are not waivable by contract, signage, or staff statement. Every retail transaction in Australia is subject to them.
Acceptable quality
Goods must be safe, durable, free from defects, acceptable in appearance and finish, and fit for all purposes for which goods of that kind are commonly supplied. The test is what a reasonable consumer, fully aware of the condition, would regard as acceptable, taking into account price, age, and any disclosures.
Practical examples
- A $400 jacket whose seam fails after two wears, not acceptable quality.
- A clearly marked second-hand item with a known dent, buyer's awareness modifies the test.
- A $20 phone charger that overheats in week one, not acceptable quality regardless of price.
Fitness for a disclosed purpose
If the customer tells you (or your staff) what they need the product for, and relies on that conversation, the goods must be fit for that purpose. Triggered the moment a customer says, 'I'm looking for a bag I can hike with.' If you sell them a fashion handbag and the strap fails on the trail, you're on the hook.
Practical examples
- Customer asks for shoes 'I can run in', fashion sneakers given, soles wear through. Failure.
- Customer asks for paint 'I can use outside on metal', interior paint given. Failure.
- Customer doesn't ask, just picks an item, s 55 not triggered; falls back to s 54.
Goods match their description
When goods are sold by description (online listing, in-store sign, marketing copy, label), the goods supplied must correspond to the description. The description includes anything the customer reasonably relied on to make the buying decision, including 'merino wool', '100% leather', 'waterproof', etc.
Practical examples
- Label says '100% merino wool' but it's a wool/acrylic blend, breach.
- Listing says 'leather' but it's bonded leather, breach.
- 'Waterproof' boots that leak in the rain, breach.
Goods match the sample or demonstration model
If you sell from a sample (a display fridge, a fabric swatch, a tasted cheese) the bulk goods delivered must match the sample in quality and characteristics. Common in furniture, flooring, food retail.
Practical examples
- Customer chooses sofa from showroom display in 'oat linen', delivered sofa is darker/coarser fabric. Breach.
- Tile shop sample matches one box but not the rest of the order due to a batch mismatch. Breach.
- Cheese-counter taste sample doesn't match what's wrapped at the back. Breach.
The Decision Tree
Major failure vs minor failure, who chooses the remedy
When a statutory guarantee fails, the next question is whether the failure is ‘major’ or ‘minor’. The category determines who picks the remedy, and getting this wrong is the single most common ACL compliance failure.
Major failure
A failure is 'major' if any one of these applies: a reasonable consumer would not have bought the item had they known about it; the goods are significantly different from the description, sample, or demo; the goods are substantially unfit for purpose and can't be fixed within a reasonable time; or the goods are unsafe.
Remedy
The customer chooses the remedy: refund, replacement (with an identical or near-identical item), or keep the goods and claim compensation for the reduction in value. The retailer does not get to insist on repair.
Examples
- $1,500 espresso machine that won't boil water, substantially unfit, can't be quickly remedied.
- Couch delivered in a different colour from the order, significantly different from description.
- Children's pram with a wheel that detaches under normal use, safety failure.
Minor failure
A failure that can be remedied within a reasonable time. Cosmetic defects, a minor part that fails but is replaceable, a feature that works after a quick adjustment. The retailer gets to choose the remedy first.
Remedy
The retailer chooses: repair, replace, or refund. You may insist on repair if it can be done in a reasonable time and the customer doesn't suffer significant inconvenience. If the repair fails or takes too long, the failure becomes major and the customer regains the right to choose.
Examples
- Toaster lever sticks, can be replaced or repaired same-week.
- A button missing on a shirt, small fix, repair offered.
- A door hinge on a wardrobe loose, replacement hinge fitted.
In-Store Compliance
Signage and policy wording, what's allowed
The ACCC actively scans retail premises and online stores for signs and policy wording that misrepresent consumer rights. Most breaches are not deliberate, they're leftover templates and well-meaning but inaccurate phrasing. Audit your shop and website against the list below.
No 'No refunds' signs
Section 29(1)(m) of the ACL prohibits misleading representations that a consumer right does not exist. 'No refunds, no exchanges' or 'No refunds on sale items' or 'Sale items final' breach this if they imply ACL rights don't apply. The phrase 'No refunds for change of mind' is the closest you can get, it's accurate because change of mind isn't an ACL right.
No 'No warranty on this item' signs
Statutory guarantees apply regardless of any warranty you offer or refuse. Saying 'No warranty' suggests the consumer has no rights, they always do. Use the phrase 'No additional manufacturer warranty' if you mean the manufacturer isn't offering a voluntary warranty beyond the ACL.
Display the ACL summary at counters
Not strictly mandatory, but ACCC guidance recommends visible signage acknowledging statutory rights. A printed card near the till saying 'Our refund policy is in addition to your rights under the Australian Consumer Law' satisfies the spirit and signals compliance.
Discount and sale items still carry guarantees
A 50%-off sale ticket does not strip the goods of statutory guarantees. The price-discount can be a factor in what 'acceptable quality' means (a $5 t-shirt is held to a different standard than a $200 t-shirt), but the underlying guarantees apply.
Receipts must be offered over $75
Section 100 requires a receipt for any transaction over $75 (inclusive of GST). Below $75, you must provide one on request within 7 days. The receipt must show date, supplier name and ABN, items supplied, and price.
Online vs in-store, same rules
The ACL applies identically online. A 'final sale, no returns' clause on a website is just as unenforceable as the equivalent sign in-store. Online retailers must additionally clearly display delivery costs and total prices including GST before checkout.
Sample ACL-compliant refund policy
Print this at your counter and on your website's returns/refunds page. It separates statutory ACL rights from your own change-of-mind goodwill policy, which is the structure the ACCC encourages.
Counter / website wording
OUR REFUND POLICY We will provide a refund, replacement, or repair if: - The product is faulty or has a defect (acceptable quality, s 54 ACL) - The product doesn't match its description, sample, or demo (s 56 / 57 ACL) - The product isn't fit for the purpose you told us about before purchase (s 55 ACL) For a MAJOR failure, you may choose between: - A full refund, or - A replacement item, or - Keeping the goods and being compensated for any drop in value. For a MINOR failure, we will repair, replace, or refund, at our reasonable choice, within a reasonable time. If we cannot, the failure is treated as major and you may choose. Change-of-mind returns: - Within 30 days, with original receipt, in original condition and packaging, we will offer an exchange or store credit (no cash refund) at our discretion. - Change-of-mind returns are a courtesy, they are NOT an Australian Consumer Law right. This policy is in addition to your rights under the Australian Consumer Law.
This is a template, not legal advice. For high-risk categories (electronics over $1,000, custom-made goods, second-hand) get a consumer-law practitioner to review your specific wording.
Why It Matters
Recent ACCC enforcement examples
The ACCC has imposed multi-million-dollar penalties on retailers for systemic ACL breaches. Recent cases (paraphrased; figures from public ACCC media releases):
| Retailer | Outcome | Why |
|---|---|---|
| Major electronics retailer (2018) | $3 million | Penalised for staff training that consistently directed customers to manufacturer warranties instead of acknowledging ACL refund rights. The ACCC argued this systematically misled customers about their statutory entitlements. |
| National furniture chain (2020) | $2.5 million | Penalised for signage and contractual terms suggesting that sale items, floor stock, or items collected by the customer carried no refund rights. The terms purported to exclude ACL guarantees, which cannot be excluded. |
| Online fashion retailer (2022) | $200,000+ | ACCC enforcement undertaking for a returns policy that imposed unreasonable conditions (15-day return window, $25 'restocking fee', original-packaging requirement) on customers seeking statutory remedies for faulty goods. |
| Department store (2023) | Undertaking + correction | Required to retrain staff and amend point-of-sale scripts after a customer was refused a refund on a major-failure item and told to 'take it up with the manufacturer'. |
Practical tips for retailers
Train every staff member on the major/minor distinction
The most common ACL failure isn't the policy, it's what a casual staff member says at the till. A confident ‘sorry, we'll need to send it back to the manufacturer’ on a major-failure item is a breach. Roleplay the conversations in a Saturday-morning team huddle.
Separate goodwill from statutory rights
Your 30-day change-of-mind store-credit offer is a goodwill program. The customer's ACL rights sit above and beyond that. Print them separately. Don't let goodwill conditions contaminate statutory claims.
Document the failure, photos and notes
When a customer brings back a faulty item, photograph the defect, note the date of purchase, and log who served them. Most ACL disputes are resolved in the shop, but when they escalate to Fair Trading or VCAT, contemporaneous notes win.
Audit your signage and website quarterly
Old ‘no refund’ signs migrate from staffroom to shopfront. Old return policies linger in footer pages of websites. Block out 30 minutes once a quarter to walk the shop with fresh eyes and scroll the website footer.
Frequently Asked Questions
What is the Australian Consumer Law (ACL)?
The Australian Consumer Law (ACL) is Schedule 2 of the Competition and Consumer Act 2010, a single national consumer-protection law that applies in every state and territory. For retailers it imposes statutory consumer guarantees on the sale of goods and services (acceptable quality, fitness for purpose, matching description and sample) that cannot be excluded by contract, signage or staff statement. It is enforced by the ACCC at federal level and by state and territory fair-trading regulators such as NSW Fair Trading and Consumer Affairs Victoria.
Can a sign saying 'No refunds' be enforced in Australia?
No. Section 29(1)(m) of the Australian Consumer Law makes it an offence to misrepresent that a consumer right doesn't exist. Statutory guarantees under sections 54 to 59 apply regardless of any sign, contract clause, or staff statement to the contrary. The most you can do is post a 'No change-of-mind refunds' notice, because change of mind isn't an ACL right in the first place.
What's the difference between a major and minor failure?
A major failure is one that a reasonable consumer would not have accepted had they known; that makes the goods substantially unfit; that significantly differs from sample/description; or that is unsafe. The customer chooses the remedy, refund, replacement, or compensation. A minor failure is anything that can be reasonably repaired or replaced, and the retailer chooses the remedy first. Major failure cases are about consumer choice; minor failure cases are about retailer-led remedy.
Do I have to give a refund just because the customer changed their mind?
No. Change of mind is not protected by the ACL. You may offer change-of-mind returns as a goodwill policy (most retailers do, with 14 to 30 days and conditions), but you're under no statutory obligation. The catch: your refund policy must clearly separate change-of-mind goodwill from ACL rights, and you can't use the change-of-mind conditions to refuse a genuine statutory claim.
What if I sell goods 'as is' or at a heavy discount?
Discounting doesn't strip the goods of statutory guarantees. However, a clearly disclosed defect (e.g., 'sample with scratched corner, $200 off') changes what counts as 'acceptable quality' because the customer was made aware. The disclosure must be specific. 'As is, no returns' is too vague to remove ACL coverage.
Can I require the original packaging or receipt for a faulty-goods return?
Reasonable proof of purchase is required (receipt, bank statement, loyalty record), that's allowed. But you cannot refuse a statutory remedy because the packaging is missing or the receipt is from a third-party gift. The ACCC explicitly warns against unreasonable returns conditions for genuine statutory claims.
Does the ACL apply to online sales differently?
No, the ACL applies identically to in-store and online sales by Australian retailers. Online retailers must additionally display total prices including GST, delivery costs upfront, and provide a clear way to return faulty goods. International retailers selling to Australian consumers are also subject to the ACL, though enforcement against offshore sellers is harder in practice.
Run a tighter retail back-office
OneBookPlus tracks every sale, refund, and customer interaction, the receipts, photos, and notes you need when an ACL dispute lands at the counter.
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Reviewed by Bishal Shrestha
About the author
Bishal Shrestha
Founder & CEO, OneBookPlus
Bishal spent a decade running digital projects for Australian small businesses before founding OneBookPlus. He writes and maintains these pages, and publishes what OneBookPlus does not do alongside what it does.
Read the founder bioHow this page was researched
The compliance and licensing statements above are taken from the bodies this page links to, including the ACCC, so you can read the rule rather than take our word for it. Plan prices come from the OneBookPlus price registry, so the page and the checkout cannot disagree. Everything said about OneBookPlus describes what the product does today, and the page says so where it does not do something.
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