Your Refund Policy Isn’t a Loophole: What the Law Actually Says

Few phrases are more common on Australian websites than “no refunds,” but few are as legally risky. Under the Australian Consumer Law (ACL), blanket no-refund policies are rarely enforceable and, in some cases, they’re unlawful.

Your refund policy is not just a business preference. It is a statement that can shape customer expectations, affect your reputation, and determine whether you are compliant with the law. A poorly drafted policy can mislead customers, breach the ACL, and open you up to complaints or regulatory action.

Let’s look at what the law actually requires, the mistakes businesses make, and how to create a refund policy that is both compliant and protective of your bottom line.

Understanding Consumer Guarantees

The ACL gives consumers a set of automatic guarantees that apply every time they buy goods or services. These guarantees cannot be excluded or modified. They require that:

• Goods must be of acceptable quality, match their description, and be fit for their purpose.

• Services must be provided with due care and skill, within a reasonable time, and achieve the result agreed with the customer.

If these guarantees are not met, the consumer is entitled to a remedy which may include a refund, repair, replacement, or re-supply of services. Importantly, these rights apply regardless of what your website terms say.

This means that a blanket “no refunds” statement is not only unenforceable but can also be considered misleading conduct, exposing your business to further liability.

Why Clear and Compliant Refund Policies Matter

Many businesses make the mistake of copying refund wording from another website, resulting in terms that are either too harsh (breaching the ACL) or too vague (providing no protection at all).

A clear, compliant refund policy builds trust with your customers. It shows you understand your legal obligations and are willing to stand behind your products and services. It also manages expectations by explaining exactly when refunds will be offered and when they will not, reducing disputes and chargebacks.

For example, it is entirely lawful to state that you do not provide refunds for change-of-mind cancellations, provided you also acknowledge that you will provide refunds where legally required.

The key is to get the balance right: protect your business from unnecessary losses while complying with the law.

Consequences of Non-Compliance

Businesses with unlawful or misleading refund clauses risk intervention from regulators such as the ACCC or state-based consumer protection bodies. Outcomes can include enforceable undertakings, infringement notices, orders to correct your terms, and in serious cases, civil penalties.

The reputational damage can be just as significant. In an age where consumers share negative experiences online, one public complaint about a refused refund can undo months of marketing and harm future sales.

Building a Refund Policy That Protects Your Business

A strong refund policy is not about giving money back at every opportunity. It is about having a clear process that protects both you and your customers. It should:

• Explain when refunds are available under the ACL

• Set out a process for making a claim and reasonable timeframes

• Clarify what happens with cancellations and rescheduling

• Be consistent across your website, contracts, booking forms, and automated emails

When these elements are aligned, you minimise the risk of disputes and have a clear reference point if a disagreement arises.

Final Thoughts

In 2025, businesses cannot afford to get refund terms wrong. The law is clear, customers are informed, and regulators are active.

A “no refunds” line on your website is no longer good enough and will probably end up doing more harm than good.

Taking the time to review and update your refund policy is one of the simplest and most cost-effective ways to reduce legal risk and strengthen your customer relationships.

Next step: If you are unsure whether your refund terms meet the requirements of the ACL, we can help. The Website Core Bundle includes a Refunds and Returns Policy, as well as a Website Terms of Use and Privacy Policy, tailored for Australian Businesses. Or book a 1:1 strategy call to have your existing policy reviewed and updated so you can trade with confidence.

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This blog is intended for general information purposes only and does not constitute legal advice. The content is based on Australian law and may not be current at the time you read it. Legal requirements may vary depending on your circumstances. Always seek independent legal advice tailored to your specific situation before acting on any information provided.