Deposit refund rights Australia: deposits and cancelled orders

Quick answer

Who cancelled, and why, decides whether you get your deposit back. Start with the contract terms; the ACL sits on top of them in the situations below.

• The business cancelled, never supplied, or missed the promised supply date. Section 36 of the Australian Consumer Law (ACL) requires a business that accepts payment to supply all the goods or services within the period it specified, or within a reasonable time if it specified none. This applies to a part payment such as a deposit. Section 36 doesn't itself spell out a refund, but your most practical step is likely a written demand for the deposit back, subject to two exceptions (sections 36(5) and 36(6)). The routes to recover it are explained below.
• You changed your mind. The ACL gives no general change-of-mind refund (unsolicited door-to-door and phone sales are an exception, below), so the contract terms are likely to decide this. The business may be entitled to keep some or all of the deposit. A term in a standard form contract that penalises only you for cancelling may be unfair under sections 23 to 25, but only a court or tribunal can decide that.
• You cancelled because what arrived was faulty or not as described. For a major failure, or one that can't be remedied, you may be able to reject the goods and choose a refund of everything you paid or a replacement of the same type and similar value if one is reasonably available, if the right to reject hasn't been lost under section 262.

Your section 36 claim and the guarantee remedies run against the business that took your money and agreed to supply you (a section 36 damages claim can also be brought against a person involved in the contravention). For faulty goods, a damages action against the manufacturer under section 271 may also be available.

• If you paid recently by card, ask the issuer whether a chargeback may be available. If you used buy now pay later, ask the provider about its dispute process.
• Once you've written to the business, your state or territory consumer body may help if your complaint meets its criteria.

What the law actually says

The consumer guarantees protect you if you acquired the goods or services as a consumer under section 3, which applies if any one of these is true:

• the amount paid or payable did not exceed $100,000;
• the goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption (this is about the kind of goods or services, not your own use);
• for goods, they are a vehicle or trailer acquired mainly to transport goods on public roads.

Goods acquired for re-supply, or to use up or transform in trade or commerce in the course of production or manufacture, or of repairing or treating other goods or fixtures on land, are excluded. Services have no such exclusions. Check how section 3 applies to you.

Non-supply: section 36

Section 36(4) requires a business that accepts payment "in trade or commerce" to supply all the goods or services within the period specified at or before payment, or within a reasonable time if none was specified. Section 36(7) says this applies "whether or not the payment … represents the whole or a part" of the price. A deposit is covered.

Two exceptions apply:

• Section 36(5). The failure was due to another person's act or omission, or some other cause beyond the business's control, and the business took reasonable precautions and exercised due diligence to avoid it. Both limbs are needed.
• Section 36(6). The business offered different goods or services as a replacement and you agreed to receive them.

Section 36 also bans accepting payment where, at the time, the business intends not to supply, intends to supply something materially different, or there are reasonable grounds to believe it can't supply within the period promised (or a reasonable time) and it is aware, or ought reasonably to be aware, of those grounds.

The consumer guarantees don't cover non-supply; the statutory routes are:

• Damages under section 236 for loss or damage suffered because of the contravention. The action must be brought within 6 years after the day the cause of action accrued (section 236(2)).
• Court orders under section 237. These can include an order to refund money (section 243). You must apply within 6 years from the day the cause of action accrued (section 237(3)).

Depending on the facts, cancelling the contract and recovering your money under general contract law, or a payment dispute, may also be available. For any damages claim:

• you need evidence of the loss;
• under general legal principles, loss you could reasonably have avoided may not be recoverable;
• you can't recover the same loss twice.

Delays in services

Where the contract doesn't fix a time and the parties haven't agreed how it will be set, section 62 guarantees the service will be supplied within a reasonable time. Under section 267(1)(c), you can't take action on the section 61 or 62 guarantees where the failure happened only because of something someone other than the supplier (or its agents or employees) did, failed to do or represented. The same applies to a cause independent of human control that occurred after the services were supplied.

You can terminate under section 267 if the failure is major or can't be remedied, or if you required the supplier to fix a non-major failure and it refused or didn't do so within a reasonable time. Section 269 then entitles you to a refund to the extent the services were not consumed when termination took effect. Where nothing has been done yet, that refund may be the whole deposit. Whether a delay is a major failure depends on the facts. Instead of terminating, you can keep the contract and claim compensation for any reduction in the value of the services below the price paid or payable (section 267(3)(b)). You may also recover other loss or damage suffered because of the failure if it was reasonably foreseeable (section 267(4)); you need evidence of it, and general principles on causation and avoidable loss may affect recovery.

When goods arrive faulty

Where the business supplied the goods in trade or commerce and not by auction, the goods guarantees apply, such as acceptable quality (section 54) and matching the description (section 56).

If the failure is major, or can't be remedied, you have two alternatives:

• reject the goods (if the right to reject hasn't been lost under section 262) and choose a refund or a replacement of the same type and similar value if one is reasonably available (section 263); or
• keep them and claim compensation for any reduction in their value below the price paid or payable (section 259(3)(b)).

If the failure isn't major and can be remedied, section 259(2) lets you require the business to remedy it within a reasonable time, and under section 261 the business chooses whether to repair the goods, replace them with goods of an identical type, or refund. If it refuses or doesn't do so within a reasonable time, you can have the failure remedied elsewhere and recover all reasonable costs, or reject the goods (subject to section 262).

You can also claim other loss caused by the failure that was reasonably foreseeable (section 259(4)), if you can evidence it; under general legal principles, loss you could reasonably have avoided may not be recoverable, and you can't claim the same loss twice.

Separately, you may be able to claim damages from the manufacturer (which can include the importer, where the maker has no place of business in Australia) if the goods fail acceptable quality (section 271(1)) or a description applied by or on behalf of the manufacturer, or with its consent (section 271(3)). These damages cover any reduction in value below the lower of the price paid and the average retail price, plus reasonably foreseeable loss (section 272). The manufacturer may have defences, such as another person's act, a cause independent of human control after the goods left its control, or (for acceptable quality) the price exceeding the recommended or average retail price (sections 271(2) and 271(4)). If you asked for repair or replacement under the manufacturer's warranty, section 271(6) may limit the reduction-in-value claim. You must start within 3 years after you first became aware, or ought reasonably to have become aware, that the guarantee wasn't complied with (section 273).

Whether a failure is major turns on the tests explained in what major failure means.

Deposit and cancellation terms

Sections 23 to 25 protect you against unfair terms in a consumer or small business standard form contract. A term is unfair only if all three of these apply to it. It:

• would cause a significant imbalance in the parties' rights and obligations;
• is not reasonably necessary to protect the legitimate interests of the party it advantages;
• would cause detriment if relied on.

Section 25's examples of terms that may be unfair include a term that penalises one party but not the other for breach or termination, and one that lets only one party terminate.

An unfair term in a standard form consumer contract is void (section 23(1)), but whether a term is unfair is for a court or a tribunal with jurisdiction to decide if it's disputed. The contract continues if it can operate without that term. Proposing an unfair term in such a contract, or relying on one, can also be a contravention that attracts a penalty (section 23); check the ACCC's guidance on which contracts this covers.

Separately, section 64 makes a term void to the extent it purports to exclude, restrict or modify the consumer guarantees or your remedies for them. So "deposits are non-refundable" can't take away a refund you're entitled to for a major failure. Section 64A, by contrast, allows a supplier's contract to limit its liability for goods or services not of a kind ordinarily acquired for personal, domestic or household use or consumption. For goods, that limit can be repair, replacement, equivalent goods or their cost, but not for the guarantees of title, undisturbed possession and freedom from undisclosed securities (sections 51 to 53). For services, it can be supplying them again or the cost. The limitation doesn't apply if you establish that it isn't fair or reasonable for the supplier to rely on it.

Misleading statements

Telling you a deposit can never be refunded, when the law says otherwise, may be a false or misleading representation about your rights or remedies (section 29(1)(m)). It may also be misleading conduct under section 18.

A delivery date is a representation about a future matter. Under section 4, it is taken to be misleading if the business had no reasonable grounds for making it. In proceedings, the business is taken not to have had reasonable grounds unless evidence to the contrary is produced, and producing evidence doesn't by itself show that it had them.

Door-to-door and phone sales

If you signed up after an uninvited approach away from the business's premises (at your door or in a public place, for example) or an uninvited phone call (an unsolicited consumer agreement, over $100 or with a price not ascertainable when made), you can terminate within 10 business days after the agreement is made. For phone sales, the period runs from when you were given the agreement document. It extends to 3 or 6 months if the dealer breached certain rules.

When this applies (and when it doesn't)

These protections are more likely to help where a business acting in trade or commerce (most sole traders are) took your money and didn't supply, supplied late or supplied something faulty, and you didn't agree to a substitute.

They are unlikely to help in these situations:

• A genuine private sale. A deposit paid to an individual selling their own goods carries no guarantee claim. The title guarantees in sections 51 to 53 are an exception, but the section 259 remedies still need a supply in trade or commerce.
• Change of mind. Unless the sale was an unsolicited consumer agreement (see above), the contract governs. A reasonable cancellation fee or retained deposit may be enforceable unless a court or tribunal finds the term unfair.
• A section 36(5) or (6) situation. Supply failed for reasons genuinely beyond the business's control despite reasonable precautions and due diligence, or you accepted a replacement. Contract law may still give you a way to recover the deposit.
• Overseas sellers. The ACCC says an overseas business that supplies goods or services directly to consumers in Australia must follow the ACL. The ACL doesn't cover you if the business doesn't directly offer its products in Australia, if the goods go to an overseas address and are then forwarded, or if the whole transaction happens overseas (ACCC: buying online). Getting a remedy from an overseas business can be hard in practice.
• The business has collapsed. Your rights may still exist, but recovering money from an insolvent business can be difficult. The ACCC says there are time limits on chargebacks, so contact your financial institution straight away (ACCC: when a business goes bust).

What to do today

1. Save the terms that applied when you ordered. Keep the order form, quote, terms, any deposit clause and the promised delivery date.

2. Identify who supplied you. Check the checkout screen, receipt and terms. On a marketplace, the ACCC says your rights run against the seller you buy from, not the platform itself, though the platform may help. If the platform sold the goods itself, it is the seller.

3. Gather proof of payment. Once goods or services are supplied, section 100 requires a business to give you a proof of transaction for supplies of $75 or more (excluding GST); below $75 you can ask for one as soon as practicable after supply, and it must be given within 7 days after your request. For a deposit on an order not yet supplied, keep the receipt, invoice or bank record. A bank record may be sufficient, depending on whether it identifies the business, the transaction and the goods clearly enough.

4. If you paid recently by card, ask your card issuer now whether a chargeback may be available. A chargeback may be available where you paid and didn't receive the goods or services. AFCA says there's no valid chargeback right under the credit card scheme rules where a customer changes their mind and decides not to use the goods or service. Time limits follow the card scheme's rules, not the ACL. AFCA says you should contact the merchant first, and that not doing so may affect your ability to request a chargeback. For buy now pay later, ask the provider about its own dispute process, which is not a chargeback. Stopping a payment doesn't end the contract.

5. Be careful about cancelling first. If the delivery date hasn't passed, or the contract fixes no date, cancelling before the business is clearly in breach could leave you as the party in breach. Consider writing to set a reasonable final date before you terminate, and get advice if the deposit is large.

6. If goods arrived faulty, document it. Take photos and keep a dated record. Where the cause is disputed, get a written independent opinion, for example from a repairer or qualified inspector, covering the cause, whether and how it can be fixed, and the cost.

7. Write to the business. State:

   • the date and amount of the deposit;
   • what was promised and when;
   • what went wrong;
   • the law that applies (section 36 for non-supply; sections 62 and 267 for a delayed service with no fixed date; the guarantees for faulty goods);
   • what you want, which is likely the deposit back.

   If you're rejecting faulty goods, say so and give the ground. Rejection is available only for a major failure or one that can't be remedied, or after the business failed to fix a non-major failure within a reasonable time, and always subject to section 262. Allow 14 days to respond (a practical default, not an ACL requirement). fairgo can generate a demand letter for you.

8. Read any offer carefully. A credit note isn't money. The ACCC says refunds should be in the same form as the original payment unless you and the business agree otherwise. A "full and final" settlement or release may end your claim, and writing "under protest" doesn't necessarily preserve your rights. Get advice before signing anything described as final.

What if the business refuses

Your state or territory consumer protection body. It may help, for example by contacting the business or conciliating, if your complaint meets its criteria. Most expect you to have tried to resolve the matter with the business first. Eligibility rules vary by state and dispute type (in the ACT, for example, statutory conciliation applies only where the remedy you seek is worth $5,000 or less). These bodies don't make binding orders in ordinary consumer disputes and can't make the business settle. Contact details are at /agencies.

A tribunal or court with jurisdiction. In NSW, Victoria, Queensland, the ACT and the NT, a tribunal (NCAT, VCAT, QCAT, ACAT or NTCAT) hears many consumer claims within its limits. In Western Australia, South Australia and Tasmania, ordinary consumer claims go to the Magistrates Court.

• Jurisdiction. It depends on each forum's enabling legislation, the type of claim and the amount, so confirm the forum and its current thresholds on the official site before filing.
• Interstate parties. A dispute between individuals living in different states may need a court rather than a tribunal (this doesn't arise where the business is a company), so confirm with the forum.
• Representation. You can usually run a claim without a lawyer, though some forums restrict legal representation (QCAT, for example, requires permission).
• Fees. Check current filing fees on the official site, and ask about fee exemptions, reductions or deferrals if cost is a concern.

Our guide to choosing the right tribunal or court has more.

The ACCC. The ACCC investigates systemic conduct rather than individual disputes, so it won't resolve your claim. Reporting a pattern of conduct can still be worthwhile.

Common mistakes

• Treating "non-refundable" as the last word. The label doesn't by itself answer a section 36 non-supply claim. A term is void to the extent it purports to exclude the guarantees or their remedies. A deposit term may also be challenged as unfair, though only a court or tribunal decides that.
• Accepting a substitute without thinking. Agreeing to different goods or services means section 36(4) doesn't apply to the original order (section 36(6)).
• Waiting. The ACL has no single warranty-style expiry for these claims, but limitation laws and forum rules still apply, and section 236 damages claims must be brought within 6 years after the cause of action accrued. Chargeback windows follow the card scheme's rules and can close much sooner. The right to reject faulty goods ends when the section 262 rejection period ends, and that period runs from supply. Section 262 also removes the right to reject in three other cases:
  • the goods were lost, destroyed or disposed of by you;
  • they were damaged after delivery for reasons not related to their state or condition at the time of supply;
  • they were attached to or incorporated in property and can't be detached or isolated without damaging them.
• Claiming the same loss twice. If you get the deposit back through a chargeback, don't also claim it from the business.

Related reading

• Business refused your refund? Here's what to do next
• Online order never arrived: getting your money back
• Furniture delivered damaged: your refund rights
• Section 64: why disclaimers can't remove your guarantees
• Misleading conduct examples under section 18
• Can I demand a refund? When the ACL gives you the right

This article is general information about Australian Consumer Law, not legal advice. It also touches on complaint and escalation pathways (state and territory consumer bodies, tribunals and courts, the ACCC, AFCA, card chargeback rules and buy now pay later providers' dispute processes, and insolvency processes) and limitation laws, whose scope, rules, thresholds and processes sit outside the ACL or can change. Confirm the current position with the relevant body before lodging. For advice on your specific case, see your state or territory consumer body — full list at /agencies.