Understanding the ACCC’s Recent Sweep: Why Your Business Needs a Compliant Refund Policy

In February 2025, the Australian Competition and Consumer Commission (‘ACCC’) released findings from a comprehensive review of over 2,000 Australian retail websites, uncovering a troubling trend: many businesses’ refund policies and terms and conditions may be misleading consumers about their rights under the Australian Consumer Law (‘ACL’). This sweep has shone a spotlight on a critical issue for businesses operating in Australia—ensuring that refund policies not only protect commercial interests but also comply with legal obligations. At DB & Co Legal, we believe this is a timely reminder for businesses to reassess their practices and avoid the pitfalls of non-compliance.

In this article, we’ll explore the key findings from the ACCC’s sweep, unpack the legal framework of consumer guarantees under the ACL, and highlight why having a clear, lawful refund policy is essential for your business. Whether you’re an e-commerce retailer, a service provider, or a brick-and-mortar store, understanding these obligations can safeguard your operations and enhance customer trust.

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The ACCC Sweep: What Did They Find?

The ACCC’s investigation focused on how businesses communicate their refund, return, and exchange policies to consumers. The results were concerning. Many websites contained statements that could mislead customers about their rights, potentially breaching the ACL.

Examples included:

• Time Limits on Faulty Returns: Policies stating that consumers must report faulty goods within a specific timeframe (e.g. 30 days) to qualify for a remedy.

• Blanket “No Refund” Clauses: Terms declaring that refunds are unavailable for sale items, custom orders, or used products, regardless of the circumstances.

• Over-Reliance on Manufacturer Warranties: Suggestions that consumers must seek remedies solely through manufacturers, rather than the retailer.

• Additional Fees or Restrictions: Conditions like non-refundable delivery fees, restocking charges, or requirements for consumers to cover return shipping costs for defective items.

These practices caught the ACCC’s attention because they conflict with the consumer guarantees enshrined in the ACL—rights that businesses cannot override, no matter how cleverly worded their policies might be. Following the sweep, the ACCC issued warning letters to several businesses, prompting most to amend their policies. These results underscore a broader issue: many businesses are unknowingly operating with terms that are not compliant with the ACL and expose them to legal risk.

For businesses, the message is clear: ignorance of the law is no excuse. The ACCC has signalled its commitment to monitoring compliance and, where necessary, taking enforcement action. This sweep is not an isolated event but part of an ongoing effort to ensure businesses respect consumers’ statutory rights.

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The Australian Consumer Law: A Non-Negotiable Framework

At the heart of this issue lies the ACL, a national law administered by the ACCC alongside state and territory consumer protection agencies. The ACL applies to all businesses operating in Australia, including those based overseas that sell directly to Australian consumers. One of its cornerstones of the framework is consumer guarantees—automatic rights that apply to goods and services purchased for personal use, typically under $100,000.

Under the ACL, consumers are entitled to expect that goods are of acceptable quality, fit for purpose, and match their description. Services must be provided with due care and skill and achieve the promised result. If these guarantees are not met—say, a product arrives faulty or a service fails to deliver—consumers have the right to a remedy, which could include a repair, replacement, or refund, depending on the severity of the issue.

Crucially, these rights cannot be diminished by a business’s terms and conditions. A “no refunds” sign or a policy excluding refunds on sale items might hold weight for change-of-mind returns (which aren’t covered by consumer guarantees), but it’s unlawful to suggest that refunds are unavailable for faulty goods or substandard services. Similarly, imposing artificial time limits or shifting responsibility to manufacturers contradicts the ACL’s intent.

The ACCC’s sweep highlighted how easily businesses can cross this line. Misleading statements don’t just confuse consumers—they can lead to penalties, reputational damage, and legal disputes. For business owners, this is a wake-up call to align their policies with the law.

Why a Compliant Refund Policy Matters

Beyond avoiding ACCC scrutiny, a well-crafted refund policy offers practical benefits for your business. At DB & Co Legal, we’ve seen firsthand how the right approach to refunds can strengthen client relationships and protect commercial interests.

Here’s why it’s worth investing in:

1. Building Consumer Trust

In today’s competitive market, particularly online, trust is a currency. Consumers are more likely to buy from businesses that offer clear, fair refund policies. A policy that acknowledges their legal rights—while setting reasonable boundaries for discretionary returns—reassures customers that they won’t be left out of pocket if something goes wrong. This is especially critical in e-commerce, where shoppers can’t inspect goods before purchase.

2. Avoiding Legal and Financial Risks

Non-compliant policies can attract more than just a warning letter. The ACCC has a track record of pursuing enforcement action against businesses that mislead consumers about their rights. Penalties can be substantial, and legal battles are costly—not to mention the hit to your brand’s reputation. A proactive review of your policies can mitigate these risks before they escalate.

3. Streamlining Operations

A clear refund policy reduces ambiguity for both staff and customers. When everyone understands the process for handling returns—whether due to a fault or a change of mind—disputes are less likely to arise. This saves time, reduces friction, and allows your team to focus on growth rather than firefighting complaints.

4. Enhancing Professionalism

A legally sound refund policy signals that your business operates with integrity and professionalism. It demonstrates an understanding of your obligations and a commitment to fair dealing—qualities that resonate with customers and set you apart from competitors who cut corners.

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Crafting a Compliant Refund Policy: Key Considerations

So, what does a good refund policy look like? While every business is unique, there are universal principles to follow. At DB & Co Legal, we work with clients to develop policies that balance legal compliance with operational needs.

Here are some steps to consider:

• Acknowledge Consumer Guarantees: Clearly state that your policy respects consumers’ rights under the ACL. For example, you might include a clause like, “If a product is faulty, not fit for purpose, or doesn’t match its description, you may be entitled to a remedy under Australian Consumer Law.”

• Distinguish Between Legal and Voluntary Returns: Make it clear when refunds are mandatory (e.g. for faulty goods) versus discretionary (e.g. for change-of-mind returns). For the latter, you can set conditions like timeframes or proof of purchase, as long as they don’t undermine statutory rights.

• Avoid Misleading Language: Steer clear of blanket statements like “no refunds under any circumstances” or “all sales are final.” If you don’t offer change-of-mind refunds, specify that this doesn’t apply to faulty goods.

• Be Transparent About Process: Outline how customers can request a refund, what information they need to provide (e.g. proof of purchase), and how long it might take. Transparency reduces confusion and builds goodwill.

• Review Regularly: Laws and consumer expectations evolve. The ACCC’s recent sweep is proof that regulators are paying attention. Periodic reviews ensure your policy stays current and compliant.

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Act Now to Protect Your Business

The ACCC’s sweep is more than a cautionary tale—it’s a call to action. Businesses that fail to align their refund policies with the ACL risk regulatory scrutiny, customer backlash, and financial penalties. Conversely, those that get it right can turn a legal obligation into a competitive advantage.