Refund, replacement or repair in Australia: a practical ACL decision tree

You have got a faulty product or a service that went wrong, and the business is offering you something — a repair, a replacement, a voucher, or nothing at all. But which remedy are you actually entitled to? And does the business get to decide, or do you? The answer under Australian Consumer Law (ACL) depends on one key question: whether the failure is "major" or not. Get that classification right, and the rest of the decision falls into place.

Quick answer

Which remedy you can choose depends primarily on whether the failure is classified as major or non-major under the ACL, and on whether you acquired the goods or services as a consumer within the meaning of section 3 of the ACL. For a major failure, the consumer generally holds the power to choose the remedy — which may include rejecting the goods and seeking a refund or replacement (where the right to reject is still available), or keeping the goods and seeking compensation. For a non-major failure, the business gets the first reasonable opportunity to fix the problem, though if it fails to do so within a reasonable time, further options may open up. The right remedy also differs between goods and services — for services, the main options are cancellation, rectification, compensation or a price reduction rather than replacement.

What the law actually says

The ACL sits in Schedule 2 of the Competition and Consumer Act 2010. Where a business supplies goods or services to a person who acquired them as a consumer within the meaning of section 3 of the ACL, a set of statutory guarantees attach to the sale. These guarantees cannot be excluded by store policy or contract terms — under section 64 of the ACL, any term that tries to exclude, restrict or modify these guarantees or their remedies is void to the extent it does so.

The remedies framework for goods lives in sections 259 to 263, and for services in sections 267 to 270. The consumer guarantee is primarily a right against the seller, not the manufacturer — though manufacturers may have separate obligations, including under the actions-against-manufacturers framework in sections 271 and 272.

The major/non-major split for goods

Section 260 sets out when a failure to comply with a consumer guarantee is a major failure. For goods, a failure is major if:

• A reasonable consumer, fully aware of the nature and extent of the failure, would not have acquired the goods.
• The goods depart in one or more significant respects from their description, or from a sample or demonstration model by reference to which they were supplied.
• The goods are substantially unfit for their common purpose and cannot easily be made fit within a reasonable time.
• The goods are substantially unfit for a specific purpose the consumer made known to the supplier, and cannot easily be made fit within a reasonable time.
• The goods are unsafe.

If the failure is major, section 259 gives you the right to choose your remedy. You can:

• Reject the goods and choose a refund or a replacement of the same type and similar value — provided the right to reject has not been lost (more on that below).
• Keep the goods and seek compensation for the reduction in value. Compensation for reasonably foreseeable consequential loss may also be available.

If the failure is non-major — real and genuine, but not rising to the level of major — the business gets the first reasonable opportunity to remedy it. Under sections 259 and 261, you may require the supplier to remedy a non-major failure within a reasonable time; section 261 explains how the supplier may do so — by repair, replacement, or refund, with the supplier choosing which. If the business fails to remedy within a reasonable time, you may be entitled to have the item fixed elsewhere and recover reasonable costs, or in some cases to reject the goods, depending on the circumstances.

The major/non-major split for services

For services, section 268 defines a major failure. A failure to comply with a consumer guarantee for services is major if:

• A reasonable consumer, fully aware of the nature and extent of the failure, would not have acquired the service.
• The service, taken as a whole, is substantially unfit for its purpose and cannot be made fit within a reasonable time.
• The service, or a product resulting from it, is substantially unfit for a specific purpose the consumer made known to the supplier, and cannot be made fit within a reasonable time.
• The service fails to achieve a result the consumer made known to the supplier, and cannot be made to achieve that result within a reasonable time.
• The service creates an unsafe situation.

For a major failure in services, you may cancel the contract and recover money paid for the unsupplied or unconsumed portion, or keep the contract and seek compensation or a price reduction.

For a non-major failure in services, the business gets an opportunity to rectify the problem within a reasonable time. If it fails to do so, you may be entitled, depending on the statutory pathway, to have the failure remedied elsewhere and recover reasonable costs, or to cancel the contract where the conditions are met.

When the right to reject goods can be lost

Under section 262, the right to reject goods (and therefore to demand a refund or replacement) can be lost, including where:

1. The rejection period has ended — that is, you have had the goods for a period that is reasonable given the nature of the goods and the failure.
2. The goods have been lost, destroyed, or disposed of by you.
3. The goods were damaged after delivery for reasons unrelated to the failure.
4. The goods have been attached to or incorporated into real or personal property in a way that cannot be undone without damaging that property.

This is why timing matters — raise the problem in writing as soon as you identify it. The longer you wait, the more likely the rejection period has passed, and the harder it becomes to argue the defect existed at the time of supply.

When this applies (and when it doesn't)

The remedies framework above applies when you acquired the goods or services as a consumer within the meaning of section 3 of the ACL. Broadly, that covers goods or services acquired for personal, domestic, or household use, and also goods or services priced at or below $100,000 — subject to exclusions. Goods acquired for re-supply, or for certain production, manufacturing or repair uses, may be excluded; some service acquisitions may also be excluded depending on how they're acquired and used.

The framework generally does not apply when:

• You are buying from a private individual rather than a business. The ACL applies to businesses acting in trade or commerce. Most sole traders — a personal trainer, a freelance tradesperson — will qualify as a business even if they are an individual, because the test is whether they are acting in trade or commerce, not whether they are incorporated.
• The failure was caused by you — misuse, accidental damage, or failure to follow care instructions.
• The fault was disclosed to you before purchase and you accepted it anyway.
• You simply changed your mind. Change-of-mind returns are a matter of store policy, not statutory right.

For goods bought from overseas sellers, the ACL may still apply where the seller supplied directly to an Australian consumer, but application and enforcement across borders can be complex — check the position before relying on an ACL demand. See our article on buying from overseas sellers for more detail.

What to do today

Working through the decision tree in order saves time and frustration.

Step 1 — Identify whether you have a goods or services problem. The remedies differ. A faulty dishwasher is a goods problem. A plumber who flooded your bathroom is a services problem. Some involve both (a tradesperson who supplies and installs a part).

Step 2 — Identify which consumer guarantee has been breached. For goods, the most common are section 54 (acceptable quality), section 55 (fitness for a disclosed or represented purpose — where you made a purpose known, or the supplier represented the goods were fit for it, and it was reasonable to rely on the supplier), and section 56 (match the description). For services, section 60 (due care and skill) is the most commonly relevant.

Step 3 — Classify the failure as major or non-major. Apply the tests above honestly. A scratch on a product that still works perfectly is almost certainly non-major. A laptop that won't turn on after two weeks of normal use may be a major failure, depending on the fault and whether it can be fixed within a reasonable time. Our article on what major failure means under the ACL goes deeper on this classification.

Step 4 — Decide what outcome you actually want. If the failure is major and you want your money back, say so clearly. If you'd prefer a working replacement, say that. If the failure is non-major and you're happy for the business to repair it, that's also a valid path — just set a reasonable deadline and document the agreement in writing.

Step 5 — Put it in writing. A written demand letter — email is fine — creates a record, sets a deadline, and signals that you know your rights. Include the date of purchase, a description of the failure, the consumer guarantee you say has been breached, whether you consider the failure major or non-major, and the remedy you are seeking. If you say the failure is major, name the remedy you choose; if it's non-major, require the supplier to remedy it within a reasonable time. Give the business a reasonable time to respond (7 to 21 days is typical).

Not sure how to draft it? fairgo can generate one for free in about 90 seconds. The wizard identifies the relevant ACL sections automatically and produces a letter you can send under your own name.

Step 6 — Keep the goods (or evidence of the service failure). Don't throw away a faulty product or delete photos, messages, or invoices. If the dispute escalates, you'll need this evidence.

What if the business refuses

If the business ignores your letter, disputes the classification of the failure, or simply refuses to act, you have several escalation options.

Your state or territory Fair Trading body offers a free conciliation service. The body contacts the business on your behalf and attempts to broker a resolution. Importantly, Fair Trading cannot make binding orders or compel payment — only a court or tribunal can. Conciliation is voluntary and confidential, and the body will not accept every dispute. You generally need to show you already tried to resolve the matter directly with the business. Full contact details for every state and territory body are at /agencies.

A state consumer tribunal or court is the binding forum if conciliation fails or is not available. Which forum is correct depends on your state or territory, the nature of the dispute, and the amount claimed. Options across Australia include NCAT (NSW), VCAT (Victoria), QCAT (Queensland), and equivalents elsewhere. In many ordinary ACL disputes, the Magistrates Court or equivalent may also be the correct binding forum. You can often use these forums without a lawyer, though you may bring one. Filing fees vary — check the official website, and ask about waivers or deferrals. See our guide on which tribunal to use for an overview.

For financial products and services, the Australian Financial Complaints Authority (AFCA) at afca.org.au is a free external dispute resolution scheme; for eligible complaints, its accepted determinations can bind member financial firms, subject to AFCA's rules.

A well-drafted demand letter that identifies the failure as major and cites the relevant ACL sections often resolves disputes before any escalation. Businesses know that tribunals have heard the "the warranty expired" argument many times and find it unpersuasive. The letter itself shifts the dynamic.

Common mistakes

Accepting a repair when you are entitled to choose your remedy. If the failure is major and the right to reject is still available, the business cannot insist on a repair instead of your chosen refund or replacement — you choose. (You may also keep the goods and seek compensation for the reduction in value.)

Confusing the manufacturer's warranty with your statutory rights. The consumer guarantee is a right against the seller, not the manufacturer. "Your warranty has expired" is the seller's warranty — it has no bearing on your statutory rights under the ACL. A product that fails well after the manufacturer's warranty period may still breach the guarantee of acceptable quality if a reasonable consumer would have expected it to last longer given its age, price, and type. See our article on consumer guarantees versus warranties for more.

Accepting a store credit or voucher without checking whether you're entitled to cash. For a major failure where you validly reject the goods and choose a refund, you're generally entitled to money back rather than a store credit, unless you agree otherwise.

Not putting the complaint in writing. A phone call is not a record. If the dispute escalates, you need to show what you said, when, and how the business responded — so follow up any call with a summary email.

Waiting too long. As noted above, the right to reject goods can be lost once a reasonable rejection period has passed. The ACL does not set a single fixed warranty-style expiry period for consumer guarantee claims, but timing still matters. Delay can make it harder to prove the fault reflects a lack of acceptable quality at the time of supply, and your right to reject may no longer be available. Raise the problem as soon as you identify it.

Going straight to the ACCC. The ACCC investigates systemic conduct and does not resolve individual consumer disputes. For your specific case, your state Fair Trading body and the relevant tribunal or court are the right forums.

Misclassifying a non-major failure as major. Overstating your case can undermine your credibility. If the failure is genuinely non-major, give the business a reasonable opportunity to fix it first. If they fail to do so within a reasonable time, your options expand from there.

Related reading

• Replacement vs repair vs refund — which remedy can you choose?
• What "major failure" really means under the ACL
• Section 261 ACL — how the supplier may remedy a non-major failure

This article is general information about Australian Consumer Law, not legal advice. The ACL is complex and your situation may have details that change the analysis. For advice on your specific case, see your state's Fair Trading body — full list at /agencies.