Is a restocking fee legal in Australia? When you can refuse it

You take something back and the store offers your money minus a "restocking fee" of 15 or 20 per cent.

Quick answer

Why you're returning the goods decides whether a restocking fee can apply.

• You changed your mind. The Australian Consumer Law (ACL) doesn't require a store to accept a change-of-mind return. If a store offers one, it can attach conditions, including a restocking fee, so the starting point is whether the fee was clearly disclosed in the return terms when you bought. A term in a consumer standard form contract may be unfair under sections 23 to 25, but only a court or tribunal can decide that. A fee that was hidden, or that contradicts an advertised "free returns" promise, may also be misleading (sections 18 and 29).
• The goods have a major failure, or a failure that can't be remedied. A restocking fee has no place here. If your right to reject hasn't been lost under section 262, you can reject the goods and choose a refund of the money you paid 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)). Any term saying otherwise is void to the extent it restricts that remedy (section 64).
• The fault is not major and can be fixed. You can require the business to remedy the failure. The business chooses the form of remedy: repair, replacement with goods of an identical type, or a refund (section 261). If it chooses a refund, that is a refund of the money you paid, not that money less a fee.
• You got the wrong item, or it doesn't match the listing. Goods must match their description (section 56). A departure in one or more significant respects is a major failure (section 260(1)(b)); a minor mismatch isn't automatically major.
• The goods never arrived. Under section 36 a business that accepts payment must supply within the period it specified, or within a reasonable time. This doesn't apply if the delay was due to someone else's act or omission or another cause beyond its control and it took reasonable precautions and exercised due diligence, or if you agreed to a substitute it offered. Ask the business to supply the goods or return your money. The guarantee remedies don't apply; if it refuses, a payment dispute (step 5), cancelling and recovering your money, or damages or other court orders may be available, depending on the facts.

Your guarantee remedies run against the business that sold you the goods; for some failures you may also have a claim against the manufacturer (see below). If the seller refuses after you've written to it, your state or territory consumer body may help if your complaint meets its criteria. A court or tribunal with jurisdiction can make a binding order.

What the law actually says

Change-of-mind returns are a store policy, not an ACL right. If the goods meet the consumer guarantees and you've simply changed your mind, no consumer guarantee has been breached. Any return the store allows is on its own terms, which can include a restocking fee, an exchange-only rule or a requirement for unopened packaging. Our guide to store return policies and the ACL covers how this plays out at the counter.

Faulty goods are different. When a business supplies goods to a consumer in trade or commerce, the ACL gives you consumer guarantees automatically. The ones that matter most in a restocking-fee dispute are:

• Acceptable quality (section 54). Goods must be as fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable, as a reasonable consumer fully acquainted with their state and condition (including any hidden defects) would regard as acceptable. That judgment takes account of the matters in section 54(3), such as the nature and price of the goods. It is judged at the time of supply.
• Fitness for a disclosed purpose (section 55). If you told the seller (or the person who negotiated the sale, or the manufacturer) what you needed the goods for, or the seller said they were fit for a purpose, they must be reasonably fit for that purpose. This doesn't apply if the circumstances show you didn't rely, or it was unreasonable to rely, on the skill or judgment of the seller, the negotiator or the manufacturer (whichever you told).
• Matching the description (section 56). Goods supplied by description must match that description.

When is a failure major? Under section 260(1), a failure is major if:

• the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure;
• the goods depart in one or more significant respects from the description, or from the sample or demonstration model;
• 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 disclosed purpose made known to the supplier (or the person who negotiated the sale), and can't, easily and within a reasonable time, be remedied to make them fit; or
• the goods are not of acceptable quality because they are unsafe.

Under section 260(2), two or more failures can together be a major failure if a reasonable consumer fully acquainted with the nature and extent of those failures, taken as a whole, would not have acquired the goods. The failures need not relate to the same guarantee. This applies to contracts entered into on or after 18 December 2020.

The remedies leave no room for a fee. If the failure is major, or can't be remedied, you can 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). The alternative is to keep the goods 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, the business gets the first reasonable opportunity to fix it, by repair, replacement or refund, within a reasonable time (sections 259(2) and 261). If it refuses or doesn't do so within a reasonable time, you can have the goods fixed elsewhere and recover all reasonable costs of doing so, or reject them (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.

Three details in the statute shut out a restocking fee:

• A refund under section 263(4) or section 261(d) is a refund of "any money paid" for the goods.
• A refund after rejection can't be given as store credit (section 263(5)), and a refund the business chooses under section 261(d) must also be a refund of money. The ACCC says refunds should be in the same form as the original payment unless you and the business agree otherwise.
• Section 259(7) says you can take action "whether or not the goods are in their original packaging". An "unopened boxes only" condition can't defeat a guarantee claim.

Contract terms can't take these rights away. Under section 64, a term is void to the extent it purports to exclude, restrict or modify the guarantees or your remedies. A blanket "restocking fee on all returns" term is therefore void so far as it would reduce a refund for faulty goods. For goods not of a kind ordinarily acquired for personal, domestic or household use, section 64A allows the supplier's contract to limit its liability to repair, replacement or equivalent goods, or their cost (not for the title guarantees in sections 51 to 53), unless the buyer shows that relying on the limit isn't fair or reasonable.

The ACCC says: "It's illegal for businesses to rely on store policies or terms and conditions which deny these rights" (ACCC: repair, replace, refund, cancel).

Misleading statements about fees and rights. Telling you a restocking fee applies to a faulty item may be a false or misleading representation about your rights or remedies (section 29(1)(m)). A false or misleading statement about a fee or its amount may engage section 29(1)(i), which covers price, and a fee that contradicts advertised return terms may be misleading under section 18 or section 29(1)(m). Section 18 prohibits misleading conduct generally, and a contravention needs no intent. Our guide to section 29 has more.

Unfair terms. For change-of-mind returns, the unfair contract terms protection covers terms of a consumer standard form contract. A term may be unfair if it causes a significant imbalance, isn't reasonably necessary to protect the business's legitimate interests, and would cause detriment (section 24). Section 25 lists, as an example, a term that penalises one party but not the other for termination. A term is void only if a court or tribunal finds it unfair, and the contract continues if it can operate without that term. A business that proposes or relies on an unfair term in such a contract can also face penalties (section 23), depending on when the contract was made, renewed or varied.

Claims against the manufacturer. For some failures (such as acceptable quality) you may also have a damages claim against the manufacturer (section 271), which must be started within 3 years of when you first became, or ought reasonably to have become, aware that the guarantee wasn't complied with (section 273). Damages cover any reduction in value below the lower of the price paid or payable and the average retail price at the time of supply, plus reasonably foreseeable loss caused by the failure (section 272), if you can evidence it and don't claim the same loss twice. The manufacturer has defences, such as another person's act or a cause independent of human control after the goods left its control (section 271(2)), and section 271(6) stops you suing for value-reduction damages if you first required the manufacturer to repair or replace the goods under its warranty, unless it refused or failed to remedy the failure, or didn't do so within a reasonable time. Manufacturer claims don't replace or reduce the seller's obligations to you.

When this applies (and when it doesn't)

You're likely to be protected when:

• You bought as a consumer under section 3. That means the amount paid or payable did not exceed $100,000, OR the goods are of a kind ordinarily acquired for personal, domestic or household use or consumption, OR they are a vehicle or trailer acquired mainly to transport goods on public roads. Any one limb is enough, and the second is about the kind of goods, not your own use. The exclusions cover 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. Check how section 3 applies to you.
• The supply was in trade or commerce. Most sole traders are covered. A genuine one-off private sale doesn't carry the quality, fitness or description guarantees.
• You can identify the supplier. If you bought through a marketplace or reseller, work out who legally supplied the goods from the checkout screen, the receipt and the terms that applied when you ordered. The ACCC says your rights run against the seller you buy from, not the platform itself, though the platform may be able to help, depending on the situation. If the platform itself sold the goods, it is the seller; for gig and sharing platforms, the ACCC says whether the platform or the business must meet a guarantee depends on the situation (ACCC: buying online).

A restocking fee may be lawful, or a guarantee claim may fail, where:

• It's a genuine change of mind and the fee was clearly disclosed in the return terms that applied when you bought (subject to the unfair terms and misleading conduct points above).

• The fault was specifically drawn to your attention before you agreed to buy, including by a transparent written notice displayed with the goods (section 54(4) and (5)). The same applies to a fault that an examination you made before agreeing to buy ought reasonably to have revealed (section 54(7)). These defences apply only to acceptable quality and only to that fault.

• You caused the problem. The guarantee isn't breached where you caused the goods to become unacceptable, or failed to take reasonable steps to prevent it, and they were damaged by abnormal use (section 54(6)). Both conditions must apply.

• You bought at auction. A sale by auction conducted by the seller's agent excludes sections 54 to 59. Only the title-related guarantees in sections 51 to 53 remain.

• Your right to reject has been lost under section 262. That happens if:

  • (a) the rejection period has ended, meaning the period from supply within which it would be reasonable to expect the failure to become apparent, having regard to the type of goods, their likely use, how long they can reasonably be used and the amount of use;
  • (b) you have lost, destroyed or disposed of the goods;
  • (c) the goods were damaged after delivery for reasons not related to their state or condition at the time of supply; or
  • (d) the goods have been attached to, or incorporated in, any real or personal property and can't be detached or isolated without damaging them.

  Compensation may still be available.

If the goods may be unsafe, for example an overheating electrical item, stop using them and check for a recall at Product Safety Australia.

What to do today

1. Find the return terms that applied when you bought. Look at the receipt, the website's terms on the day you ordered, shelf signs and confirmation emails.
2. Gather proof of purchase. A bank or card record may be sufficient, depending on whether it identifies the business, the transaction and the goods clearly enough. For purchases of $75 or more (excluding GST), the supplier must give you a proof of transaction; for purchases under $75 (excluding GST) you can request one as soon as practicable after supply, and it must be given within 7 days of the request (section 100).
3. Document the fault. Take dated photos or video, note when the fault appeared, and keep the goods. Don't dispose of them. If the business takes them for repair, back up any data first and read the written repair notice it must give before accepting goods for repair (section 103).
4. If the cause is disputed, get an independent written opinion. Ask a repairer or other qualified person to cover what caused the fault, whether and how it can be fixed, and the cost.
5. If you paid recently, ask about a chargeback or dispute. Paid by card? Ask your card issuer whether a chargeback may be available. Used buy now pay later? Ask the provider about its own dispute process. Time limits follow the card scheme's or provider's rules, not the ACL, so check now. Contact the business first, describe the dispute accurately, and remember there is no chargeback right for a change of mind. Stopping a payment doesn't end your contract.
6. Write to the seller (the business that supplied you, as shown on the checkout screen, receipt or terms). Say what's wrong, which guarantee you rely on, and either that you are rejecting the goods (stating the ground) and electing a refund of all the money you paid (if the failure is major or can't be remedied, or the business didn't fix a non-major failure within a reasonable time, and your right to reject hasn't been lost under section 262), or that you require it to remedy the failure. Say a restocking fee can't be deducted from a refund owed for a failure to meet a consumer guarantee (sections 64, 261 and 263). fairgo can generate a demand letter for you to send under your own name.
7. Set a deadline. Fourteen days is a practical default, not an ACL requirement.
8. Arrange return or collection. If you reject the goods, you generally need to return them. If returning them would involve significant cost because of the nature of the failure or the size, height or method of attachment of the goods, the supplier must collect them at its own expense within a reasonable time (section 263(2) and (3)).

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, and 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. The right forum depends on the dispute type and amount, so it isn't an automatic next step. 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 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. If you bought online from an individual in another state, a dispute between individuals in different states may need a court rather than a tribunal, so confirm with the forum. You can usually run a claim without a lawyer, though some forums restrict legal representation (QCAT, for example, requires permission). 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, such as a retailer routinely charging restocking fees on faulty goods, can still be worthwhile.

Damages for misleading conduct. If a misleading statement about fees or your rights caused you loss, you may claim damages under section 236 for loss suffered because of the contravention. You need evidence of the loss and can't recover it twice, and under general legal principles loss you could reasonably have avoided may not be recoverable. The action must be brought within 6 years after the cause of action accrued (section 236(2)).

Read any offer carefully. A partial refund described as "full and final" may end your claim, and writing "under protest" doesn't necessarily preserve your rights. Get advice before signing anything described as final.

Common mistakes

• Treating every restocking fee as illegal. On a genuine change-of-mind return, a disclosed fee may be lawful. Your strongest argument depends on a fault, a misleading statement or a potentially unfair term.
• Calling a faulty return "change of mind". Say in writing that you are relying on a consumer guarantee.
• Waiting. The ACL has no single warranty-style expiry for consumer guarantees, but limitation laws and forum rules still apply. The right to reject ends when the section 262 rejection period, measured from supply, ends. Delay can also make it harder to show the goods weren't of acceptable quality at supply.

Related reading

• Clothing return policies vs the ACL
• Can I demand a refund? When Australian Consumer Law gives you the right
• What "major failure" really means under the ACL
• Section 64: why disclaimers can't remove your guarantees

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, card chargeback rules and buy now pay later providers' dispute 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.