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

You have a faulty product or a service that went wrong, and the business is offering a repair, a replacement, a voucher or nothing at all. Which remedy are you entitled to, and who decides? Under the Australian Consumer Law (ACL), it depends on how serious the failure is and whether it can be fixed.

Quick answer

Work through four checks: are you a consumer under section 3 of the ACL, is the problem with goods or services, is the failure major or unfixable, and, for goods, can you still reject them? For goods with a major or unfixable failure, you choose: reject them, where your right to reject hasn't been lost, for a refund or a replacement of the same type and similar value if one is reasonably available; or keep them and claim the drop in value. For goods with a non-major failure that can be fixed, you can require the business to fix it within a reasonable time, and it chooses how; if it refuses or takes too long, you can have it fixed elsewhere and recover the reasonable cost, or reject the goods (subject to section 262). For services, require a fixable, non-major failure to be fixed within a reasonable time; if it isn't, have it fixed elsewhere and recover reasonable costs, or cancel. If it's major or unfixable, cancel or claim the drop in value. You may also claim other reasonably foreseeable losses you can evidence; avoidable loss is harder to recover.

What the law actually says

The ACL sits in Schedule 2 of the Competition and Consumer Act 2010. When a business supplies goods or services to a consumer (section 3), statutory guarantees apply. These guarantees cannot be excluded by store policy or contract terms — under section 64, any term that tries to exclude, restrict or modify these guarantees or their remedies is void to the extent it does so. For goods or services not of a kind ordinarily bought for personal, domestic or household use, section 64A can allow a term limiting liability to repairing or replacing goods, supplying equivalent goods or supplying services again (or the cost of doing so), except the title, undisturbed-possession and no-hidden-debts guarantees, unless you show relying on it isn't fair or reasonable.

The consumer guarantee is primarily a right against the seller, which includes a manufacturer that sold to you directly. Separately, sections 271 and 272 may give you a damages claim (not a refund or replacement) against the manufacturer for specific failures; section 273 requires you to file that claim within three years after you first became aware, or ought reasonably to have become aware, that the guarantee hadn't been complied with.

The major/non-major split for goods

Under section 260, a goods failure is major if:

• A reasonable consumer, fully acquainted with 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 a purpose for which goods of the same kind are commonly supplied, and can't easily and within a reasonable time be remedied to make them fit.
• The goods are unfit for a purpose the consumer made known to the supplier (or to whoever negotiated the sale), and can't easily and within a reasonable time be remedied to make them fit.
• The goods aren't of acceptable quality because they are unsafe.

For contracts made from 18 December 2020, two or more failures that aren't major on their own are together major if a reasonable consumer aware of them all wouldn't have acquired the goods (section 260(2)).

If the failure is major, or can't be remedied at all, section 259(3) lets you choose one of these alternatives:

• Reject the goods, telling the business you reject them and why, and choose a refund or a replacement of the same type and similar value if one is reasonably available (section 263) — provided the right to reject has not been lost. A refund is your money back, not store credit (section 263(5)); the ACCC says it should be the full amount, with no deduction for use. Refunds include the value of any trade-in (section 263(4)); replacements come with fresh guarantees (section 264).
• Keep the goods and claim compensation for the drop in their value below the price you paid.

If the failure is non-major and can be fixed, the business gets the first reasonable opportunity to remedy it. Under section 259(2), you may require the supplier to remedy the failure within a reasonable time; section 261 sets out how the supplier may comply: by repairing the goods, replacing them with goods of an identical type, or refunding you, with the supplier choosing which. If the supplier refuses, or doesn't remedy the failure within a reasonable time, you can have it fixed elsewhere and recover the reasonable costs, or reject the goods (subject to section 262).

Either way, you can claim damages for other loss the failure caused, such as water damage, in addition to your other remedies, if that loss was reasonably foreseeable (section 259(4); for services, section 267(4)). You'll need evidence of the amount and that the failure caused it; avoidable loss is harder to recover, and you can't recover the same loss twice. For goods, section 259(5) excludes these damages if the failure arose only from a cause independent of human control after the goods left the supplier's control.

The major/non-major split for services

For services, section 267 sets out the remedies, and under section 268 a services failure is major if:

• A reasonable consumer, fully acquainted with the nature and extent of the failure, would not have acquired the service.
• The service is substantially unfit for a purpose for which services of the same kind are commonly supplied, and can't easily and within a reasonable time be remedied to make it fit.
• The service, and any product resulting from it, is unfit for a particular purpose the consumer made known to the supplier, and can't easily and within a reasonable time be remedied to make it fit.
• The service, and any resulting product, couldn't reasonably be expected to achieve a result the consumer made known to the supplier, and can't easily and within a reasonable time be remedied to achieve it.
• The supply of the service creates an unsafe situation.

As with goods, two or more non-major failures can together be major under the same reasonable-consumer test (section 268(2)).

For a major failure in services, or one that can't be remedied, section 267(3) lets you cancel the contract and get a refund for any part not already consumed (section 269), or keep the contract and claim compensation for the drop in the service's value (in effect, a price reduction). Cancelling may also reject goods connected with the service, for a refund from their seller (section 270); whether they're connected depends on the arrangements under which they and the service were supplied, and goods bought separately aren't automatically caught.

For a non-major failure in services that can be fixed, you can require the business to fix it within a reasonable time (section 267(2)). If it refuses, or doesn't fix it within a reasonable time, you can have it fixed elsewhere and recover the reasonable costs, or cancel the contract and get a refund for any part not already consumed.

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) is lost in four situations:

1. The rejection period has ended. It runs from supply, not from when you noticed the fault, for as long as it would be reasonable to expect that kind of failure to show up, given the type of goods, their likely use, and how long and how much they can reasonably be used. A hidden fault in goods expected to last years can still fall within it long after purchase.
2. The goods have been lost, destroyed, or disposed of by you.
3. The goods were damaged after delivery for reasons not related to their state or condition at the time of supply.
4. The goods have been attached to, or incorporated in, real or personal property and can't be detached or isolated without damaging them.

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 means the amount paid or payable was $100,000 or less (for purchases from 1 July 2021; $40,000 before then), or the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption (what they are, not how you use them). Either is enough. Goods acquired to use up or transform, in trade or commerce, in production, manufacture or repair, or to re-supply, are excluded; there's no equivalent exclusion for services.

The framework generally does not apply when:

• You bought from a genuine one-off private seller rather than a business. Most guarantees need a supply in trade or commerce, though the ACCC says the title, undisturbed-possession and no-hidden-debts guarantees still apply to private sales. Sole traders, such as a personal trainer, usually count as businesses: the test is trade or commerce, not incorporation.
• You caused the fault through abnormal use or physical damage.
• A specific defect was drawn to your attention before you bought, or an examination you made beforehand ought reasonably to have revealed it. That defect can't support an acceptable quality claim, but other faults still can.
• You simply changed your mind; change-of-mind returns are store policy, not a statutory right.
• You bought at a traditional auction run by the seller's agent, in person or online (eBay generally isn't one). Only the title, undisturbed-possession and no-hidden-debts guarantees apply, though misleading-conduct law still does.
• The purchase is a financial product or service, such as insurance or a loan. The ACL's guarantees don't apply to these, and the ACCC says other laws cover them.

For overseas sellers, the ACL may still apply where the seller supplied directly to an Australian consumer, but cross-border enforcement is harder; see buying from overseas sellers.

What to do today

Step 1 — Identify whether you have a goods or services problem. 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): assess the part under the goods rules and the installation under the services rules.

Step 2 — Identify which consumer guarantee has been breached. For goods, the most common are section 54 (acceptable quality), section 55 (fitness for a purpose you made known to the supplier, the manufacturer or whoever negotiated the sale, or one the supplier said the goods were fit for, unless the circumstances show you didn't rely, or it was unreasonable to rely, on their skill or judgment), 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. A small scratch on a product that otherwise works is usually non-major, though it can still breach acceptable quality. 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 easily and within a reasonable time. Several small faults can together be major (section 260(2)). If the business disputes the fault or its cause, an independent repairer's written report on the cause and the cost carries more weight than your own view, because the repairer has no stake in the outcome. See what major failure means under the ACL.

Step 4 — Decide what outcome you actually want. If the failure is major or can't be fixed, decide whether you want your money back or a replacement (if you can still reject), or to keep the goods and claim the drop in value; for a service, whether to cancel or claim compensation. If the failure is non-major and can be fixed, the business gets the first reasonable opportunity to remedy it, and chooses how, so require it to act within a reasonable time and confirm what it agrees to in writing. The ACCC says a business may assess the product or service first. Allow a prompt inspection, say in writing whether you authorise a repair, and log repairs.

Step 5 — Check your payment method. If you paid by card, ask your card issuer now whether a chargeback is available; if you used buy now pay later, ask the provider about its dispute process; both follow the card scheme's or provider's own time limits, not the ACL's.

Step 6 — Put it in writing. Include the purchase date, the failure, the guarantee breached and whether you consider the failure major. If the failure is major or can't be fixed, say either that you reject the goods, why, and whether you want a refund or a replacement, or that you're keeping them and claiming the drop in value; if you're cancelling a service, say so expressly. If it's non-major, require the supplier to remedy it within a reasonable time. List any other losses you're claiming. Set a reasonable response deadline (14 days is a practical choice, not a legal rule; shorter for urgent faults like leaks).

Not sure how to draft the letter? fairgo can generate one for free. You send it under your own name.

Step 7 — Preserve the goods (or evidence of the service failure). Don't dispose of a faulty product (that can cost you the right to reject under section 262) or delete photos, messages or invoices; photograph faulty work before anyone fixes it. If returning rejected goods would cost you significantly because of the fault or their size, height or method of attachment, the business must collect them within a reasonable time at its own expense (section 263).

What if the business refuses

Your state or territory consumer protection body. You can lodge a complaint; contact details are at /agencies. Depending on the state, it may offer conciliation, sometimes only at your request, after you've tried the business yourself, and where it considers the matter suitable. It generally can't make binding orders, force a refund or make the business take part.

A court or tribunal with jurisdiction. Binding orders generally come from a court or tribunal, and which one can hear your claim depends on its enabling legislation, your state or territory, the parties, the type of claim and the amount, so confirm it on the official site before filing. Options include NCAT (NSW), VCAT (Victoria) and QCAT (Queensland), and in many ordinary ACL disputes the Magistrates Court or equivalent may be the correct binding forum; in South Australia and Tasmania, ordinary consumer claims go to the Magistrates Court, not a tribunal. If you and the business are individuals living in different states, a court, not a state tribunal, may have to decide the claim. Many forums suit self-represented people, but some, including QCAT, restrict legal representation. Filing fees vary — check the official website, and ask about waivers or deferrals. See which tribunal to use.

Common mistakes

Accepting a repair when you are entitled to choose your remedy. If the failure is major, or can't be fixed, and the right to reject is still available, the business cannot insist on a repair instead of your chosen refund or replacement. Allowing an assessment or repair doesn't by itself give up your rights, but the rejection period keeps running while repairs drag on.

Confusing the manufacturer's warranty with your statutory rights. "Your warranty has expired" usually refers to the manufacturer's (or an extended) warranty, a separate promise that doesn't cut down your statutory rights, and telling you otherwise can be a false or misleading representation under section 29. A product that fails well after the warranty period may still breach the guarantee of acceptable quality if it isn't as durable as a reasonable consumer would expect, given its nature, its price, what was said about it and other relevant circumstances. See consumer guarantees versus warranties.

Waiting too long. 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 show the fault reflects a lack of acceptable quality rather than later misuse or damage, and once the section 262 rejection period ends you can no longer reject. A repair, compensation for the drop in value or damages may still be available, within court and tribunal time limits.

Going straight to the ACCC. The ACCC doesn't resolve individual consumer disputes, though you can report a business to it. For your own case, use your state or territory consumer body or a court or tribunal with jurisdiction.

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
• Business refused your refund? Here's what to do next

This article is general information about Australian Consumer Law, not legal advice. It also describes state and territory consumer bodies, courts and tribunals, the ACCC, card chargebacks, buy now pay later disputes, store change-of-mind policies, warranties, financial products and overseas purchases, whose rules, fees, deadlines and thresholds 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.