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GRC Professional : GRC Winter 2012
26 GRC Professional • Winter 2012 Cover StorY refund policies The laws surrounding guarantees were changed in January 2011 when the Australian Consumer Law took effect. While many retailers believe manufacturers bear the main responsibility if a product was faulty or not fit for pur pose, it is in fact the retailer who must provide redress. Ret ailers can then chase the manufacturers, but this can be a time-consuming and frust rating process. As it stands, however, consumers have the right to a repair, replacement or refund, based on nine different guarantees that retailers must adhere to, ranging from ensuring the goods are of acceptable quality, fit for purpose and are as described in any promotional material, to guaranteeing that they will take all reasonable steps to provide spare parts or repair facilities for a re asonable time a fter purchase. Signs stating ‘No Refunds’ are illegal. A survey by the NSW Consumer Action Law Centre in December last year found that online refund policies of eight out of 12 companies, including Apple, Coles online and officeworks, were in breach of new refunds reg ulations. “Far too many companies are still not up to speed on the new regulations and are at risk of inadver tently breaching var ious laws,” says Bronwyn Gallacher of CCL Consulting. “Retailers can be victims under the law as well as culprits, yet they won’t necessarily realise they have routes to redress or are culpable of offences unless all of their systems and processes are up to date.” Russell Zimmerman, head of the Australian Retailers Association, says that many retailers are confused deciding what is and is not ‘reasonable.’ The ACCC gives the example of a consumer that buys a $6,000 television that stops working after two years. The supplier tells the consumer that they have no rights to repair or remedy because the manufacturer’s warranty only covered the television for 12 months, and the retailer tells the consumer that they should have bought an extended warranty that lasted for five years. However, the ACCC says that any reasonable consumer would expect a $6,000 television to last for more than two years. Therefore, under the consumer guarantees the consumer has a statutory right to a remedy on the basis that the television is not of acceptable quality. In fact, the supplier must provide a remedy free of charge. Indeed, if the supplier refers to the retailer needing to have taken an extended warranty, that could be a misleading claim under the act. But Zimmerman says this area of ‘perceived warranties’ is a minefield. “This is such a grey area. We are often referring members to take legal advice here because they are not getting help from manufacturers, and often feel consumers are making unreasonable claims.” The laws surrounding guarantees were changed in January 2011 when the Australian Consumer Law took effect. While many retailers believe manufacturers bear the main responsibility if a product was faulty or not fit for purpose, it is in fact the retailer who must provide redress. Carbon tax compliance: businesses under fire for artificially raising prices The carbon tax had only been in force for a week when a number of businesses were caught out trying to raise prices and blaming the tax. Brumby’s Bakery MD Deane Priest resigned over comments in an internal newsletter advising franchise members to raise their prices and “let the carbon tax take the blame.” The chain then went into damage control with an ad campaign designed to distance individual stores from the comments. The ACCC announced it would be investigating the incident. The incident is a reminder that franchises are considered individual businesses under the law. The ACCC advised that all franchisees should ensure they have access to their own legal advice, and that small businesses need to keep themselves informed on the implications of the carbon tax and pricing. The Franchise Council of Australia sent a memo to its members reminding them of their legal obligations, and warned that blaming the carbon tax for any price increases was unacceptable without a specific and valid rationale. The ACCC has signalled it will closely scrutinise any incidents where a price increase or flagged increase is attributed to the tax without an ironclad reason. Where it finds businesses engaged in wrongdoing, it can issue warning letters, infringement notices of $6,600 or take court action with fines up to $1.1 million.
GRC Autumn 2012
GRC Spring 2012