The Consumer Guarantees Act 1993 ('the Act') provides guarantees for consumers on goods and services ordinarily acquired for personal, domestic and household use.
The Act also applies to gifted goods and services. The Act imposes on retailers, manufacturers and service providers automatic guarantees ensuring that:
- goods are of acceptable quality,
- goods and services are fit for the purpose they were acquired for,
- goods and services match any advertising/promotion claim(s) made by the sales consultant,
- ownership of the good must pass to the consumer once it is purchased,
- goods and services must be of a reasonable price if no price has previously been agreed upon,
- services are performed with reasonable care and skill,
- services are completed within a reasonable period of time.
Manufacturers have the added obligation of ensuring spare parts and repairs are available for a reasonable time after purchase and any written warranties are honoured. No trader can contract out of the Act unless the trader is supplying to a business.
If a defect is discovered in a good or service, and it is relatively small, the retailer can choose to either repair, replace or refund the affected good or service provided the fault is remedied within a reasonable timeframe. If the defect cannot be restored in a timely manner or the defect is substantial, the consumer has the right to reject the product or service.
Substantial defects in good and services are where:
- the goods and services would not have been acquired by a reasonable consumer had they known of the nature and extent of the failure, or
- the goods are significantly different from the description, sample or demonstration provided by the supplier, or
- the goods and services are substantially unfit for the purpose, or the product generated through the service is of such a nature and quality that any particular results cannot be expected from it, or
- the goods and services are unsafe.
In rejecting the good or service, the consumer is entitled to choose a replacement of a similar type or value, or they can demand a full refund of the purchase price. Any refund must be in cash, cheque or credit card reversal. The Act also allows consumers to cancel service contracts and claim for compensation for any decrease in value of the product or service.
Consumers can also claim for losses that are reasonably foreseeable and are causally linked to the breach of a guarantee. For example, if a new lawnmower is faulty, the consumer can claim for lawn-mowing services or hiring a replacement lawn-mower while the original mower is being repaired. In situations where a retailer is not co-operative or has ceased to trade, consumers can lodge a complaint to the manufacturer.
Consumers can also direct their concerns to the Disputes Tribunal, the Commerce Commission or any relevant industry body complaints service.
So next time a retailer tells you "we have a no returns/refund policy", politely remind them their policy is unlawful. Even if the items are on sale/clearance, they are subject to all the guarantees provided under the Act.
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