online shopping laws

When do I have to give customers refunds for products they bought online shopping?

The Australian Consumer Law is the law that you need to comply with when customers ask for a refund for online shopping. The law gives consumers rights or guarantees in relation to your products. These include that each product must be of an acceptable quality, that it matches the description you provide, and if you give any additional warranties they will be honoured, amongst other matters*. It’s important to know your obligations under the Australian Consumer Law, because the ACCC can issue fines for not complying.

Products of acceptable quality

The law tells us that the products you sell must be of acceptable quality, which means that the products do the things a customer would expect them to do. For example, if you sell women’s clothing online it must be wearable! And the garment must be free from faults (zippers and buttons must work), safe (not highly flammable) and durable (can’t fall apart after the first couple of wears). If there are potential issues that you see, make sure you inform the customer accordingly. Say you sell distressed jeans (ie purposefully ripped) you should make sure your description matches the garment, so it is clear that the rips, or any intentional fading are not a fault or defect in the garment. Customers are more vulnerable when online shopping because they cannot directly see, touch and feel the product, so they rely on you to make sure they are of acceptable quality.

Description match

It’s pretty simple to make sure the products you sell match the description you provide, but you do need to take some added precautions when selling online. For example, if the picture you give is of a blue shirt, you can’t deliver a pink one, and if you say with your baby carrier that “no insert is required”, then the product should be suitable for a baby without using an insert. If you try to be as accurate as you can in your descriptions, you should be able to comply with this easily. However, if your product does not match the description you provide when a customer is online shopping, you will need to give a refund. This is particularly important when you run an online shop, because customers cannot feel and touch the products, so they rely entirely on your product description to assess the product.

Suitable for the purpose a customer tells you

If a customer tells you that they need a product for a particular purpose and you say it is suitable for the purpose, then it must be suitable or they are entitled to a refund. For example, if a customer tells you they need a wheel for their pram, and you tell them that the wheel you sells works with that particular pram, they are entitled to a refund if it doesn’t work. When a customer is online shopping and purchases a product that is not suitable (provided they told you their requirements), then the customer is entitled to a refund.

Samples and demonstration match

The law requires that where you offer any samples or demonstrations of products to a customer, the actual product must match. So, if you give a potential customer a sample of makeup or lotions to use, the products you supply must be the same. Or if you show a potential customer what some cleaning cloths can do, the products you sell should be able to clean in the same way. Where you have a bricks and mortar store in addition to online, if a customer sees a product in store, and orders the same when online shopping, be extra careful to ensure you provide them with the matching product.

Extra guarantees

Sometimes you may offer express warranties, such as that some wellington boots are “guaranteed to be waterproof.” It really is common sense, but if they are not waterproof, then you will have to give the customer a refund. Be careful when giving extra guarantees. Guarantees like a “happiness guarantee” can be very vague, and you may end up giving more refunds for unhappy customers than you intended. It’s tempting to offer customers extra guarantees for online shopping, particularly where the trend for e-commerce is growing quickly, so offer them with care.

Terms and conditions

The best way to ensure compliance with the Australian Consumer Law for your online shop is to make sure you have terms and conditions of sale that include clauses that comply with the law. That way you can refer back to the terms whenever someone asks for a refund.

Just as it is important to know when you need to give a refund, it is just as important to know when you don’t need to give a refund, and your terms of sale will help define when you don’t give refunds. For example, where a customer changes their mind, then you do not have to give a refund. And if a customer sees a cheaper product elsewhere, you do not have to give a refund.

Where a customer damages the goods by using them in a way that was abnormal, where they have misused them, not followed instructions, or not taken reasonable care you also do not have to provide a refund. You can also require a proof of purchase before giving a refund, however you cannot demand that a customer return it in the original packaging.

Where all these matters are clearly set out in your terms and conditions you have a rulebook you can refer the customer to, and help with the smooth running of your business. Your customers can enjoy their online shopping experience knowing that you are compliant with the law.

If you need assistance in drafting your terms and conditions to ensure compliance with the Australian Consumer Law, please book a free 20min consult here.

*There are also some obvious guarantees relating to title – that you the business has the right to sell the goods, and that no one will try to repossess them, and there are no security interests in them. And some additional guarantees such as those for manufacturers who need to be able to guarantee the availability of repairs and spare parts.

coronavirus legal

Pivoting your shop online – legal considerations

With coronavirus, you may have decided to set up an online store, or are considering doing so, but you need to know how selling online differs to selling in a bricks and mortar shop. Pivoting your shop online raises various legal matters you need to be aware of. You’ll be engaging in e-commerce, and this blog will give you a brief overview of the main legal considerations.

Product descriptions for your online store

Customers cannot physically touch your goods of course. So the product descriptions, and any images of your products on your website become an essential part of your customer’s experience. Where you upload pictures of your products, you may find that the pictures of the products are not the same as the actual product, and the pictures themselves will also differ on your screen to those seen on the screens of your customers. This is why it is a good idea to state the colour of the product. Keep in mind that customers also cannot feel the texture of the products now, so you may want to also describe their texture. But it is really important to ensure that any descriptions you write on your website are as accurate as possible, and the images you post are also as accurate as possible. In fact, the Australian Consumer Law states that descriptions of your products cannot be misleading to customers, so you must at all times describe your products as they are.

Setting prices in your online shop

When pivoting your shop online you should can use the same prices that you have already been using in your bricks and mortar store. However, if your goods are in high demand because they are vital to the health and safety of customers during the pandemic, it maybe unconscionable to set a high price. There have been laws passed in relation to excessive pricing of face masks, hand sanitiser and similar items, so make sure you are compliant in this regard. Any prices you post should also be accurate to comply with the Australian Consumer Law. Pivoting your shop online involves some work, but you may find that with so many customers online at present you may even have an increase in sales. And, the benefits of e-commerce may help you not just during the pandemic but long into the future.

Online store orders and payment

Of course customers can’t just pick up their item and take it to the checkout;  they will need to place an order online. When you are selling in your shop, it is usually obvious to your customers if you have run out of stock, but a customer cannot see this online. So, it is often a good idea to alert them to products that are low in number. If a customer pays for an item and you run out of stock you will need to refund them in full. You also cannot publish that you have more stock when you don’t or limited stock when you don’t as this would also be misleading your customers. When organising a way for your customers to pay for goods, you should ensure that you have a secure gateway. There are many secure options available today, but have a look at the fees, and ensure there are anti-fraud features built into the option you choose. E-commerce needs to be safe and secure for your customers.

Delivery from your store

When you sell products in your physical shop, a customer walks away with it. There are usually no issues as to receipt of the product. However, online shopping by its nature involves delivery, and in many respects the delivery is outside your control (unless you choose to deliver yourself). Whilst you should publish accurate delivery times and charges as much as possible, you will not have control over any late, lost or stolen deliveries. Having properly written terms and conditions including disclaimers will ensure you are not liable for any delivery issues. These terms and conditions should state that delivery matters need to be resolved with the courier company (usually Australia Post). For more expensive products you may want to give customers the option to purchase insurance for the delivery, or offer registered post.  This is even more important right now, as we are hearing that there have been many products go missing in the post during the pandemic.

Refund considerations for e-commerce purchases

The Australian Consumer Law applies equally to sales that are made online as they are to sales that are made within your physical shop. This means that your products come with automatic consumer guarantees such as that they are not faulty and match the description provided. If a product breaches a consumer guarantee you will need to provide a refund. Where you have sent the product to the customer wrapped in beautiful packaging, they do not need to return it to you in that packaging to be entitled to a refund. You can, however, request proof of purchase. Your website should have terms and conditions for your online store on it so that customers know how orders, cancellations, delivery and refunds work. This is important because in many situations when pivoting your shop online, you will not be able to offer the same level of customer service that you can in person. Perhaps also consider some additional methods of communication, such as online chats for your e-commerce store.

 Important legal documents for your online store

When you start selling online you should make sure you have 3 main legal documents. Firstly, you should have some general website terms to help protect your brand, trademarks, copy and images, and protect you if there are errors or viruses in your website.  Secondly, you should also have some “terms of sale, or “online store/shop terms and conditions” which set out various rules for how your shop will work; how orders, payment, delivery and refunds work.  These terms should help you comply with the Australian Consumer Law, and also limit your liability. Thirdly, you should also have a privacy policy because when customers are dealing with your store, you will likely be collecting their personal information. You can take a look at our online store package which includes these important three legal documents here. 

If you need any legal assistance setting up your store online, or want to speak with an e-commerce lawyer please feel free to book in a free 20min consultation.

coronavirus legal

Legals for Small Business during Coronavirus

To say these are difficult times for many small businesses is an understatement. They are “unprecedented” times, and lawyers of course like precedents. However, we are always encouraging small businesses to be proactive. We are also always encouraging you to develop strong business relationships to minimize the likelihood of disputes.

With some courts closing temporarily or being restricted in their ability to deal with disputes, strong business relationships are now more important than ever. So if you are not already, get talking.

There are many legal issues that arise from coronavirus. How for example can we maintain a safe workplace at this time? Who determines what is safe, when everyone has the same predicament?

There are also new laws being passed now faster than ever. And we wont attempt to go through them. However, we have drafted this article, legals for small businesses during coronavirus, to help you in a simple way get through the coming weeks and months. Being proactive will help enhance your chance of business survival, which in turn will help your community.

DEALING WITH SUPPLIERS

What are your legal obligations under contracts with your suppliers? For example, do you have requirements to make minimum orders? And are you able to keep complying with them? If so, for how long? If you need to change things, contact your suppliers now and start communicating with them. Ideally get a lawyer to draft any variations, but at least get any changes to your contracts in writing.

What about the suppliers’ obligations to you? Can they continue to perform their obligations? Will your supply chain be interrupted? Or has it already? Are there other sources of supply? Start communicating with your suppliers now to see how they are affected by a coronavirus, and again get any changes to contracts in writing.

Some businesses have already pivoted and sought new supplies, like the many restaurants now offering takeaway, and health practitioners delivering online. And others, have amazing stories, like fashion brands now retooling to manufacture surgical facemasks and gowns, and car manufacturers making ventilators. We know what the problem is right now, work out ways you can be part of the solution.

DEALING WITH CLIENTS/ CUSTOMERS

What are your legal obligations under your contracts with customers and clients? Can you continue to deliver your products and services as they are? If so, for how long? If you can’t deliver, or need to change your products and services somewhat eg online classes or limited stock, notify your clients and customers of the changes asap. Talk to them. If you are still open for business, tell them, and if your products and services are changing, tell them. As small business owners we are all entrepreneurs; now is the time to be creative and innovative.

Do you know your obligations in relation to refunds and cancellations? If not, have a look at the ACCC website for more information. They are constantly updating their information for small businesses and consumers during this time. Be kind, but also be wary; giving refunds when you don’t have to may not help the survival of your business. If something is canceled because of government restrictions, this impacts business and consumer rights under the Australian Consumer Law.

DEALING WITH BANKS, FINANCIERS, AND LANDLORDS

There have now been some relieving announcements; including that banks will defer loan repayments for 98% of businesses affected by coronavirus for 6 months. Nonetheless, you should still assess if you can keep making your repayments and if not discuss it with your bank. If you agree on any changes ensure that all the changes are in writing. You can stay up to date here so you know what’s going on.

There has also been an announcement that there is a moratorium on evictions for businesses impacted by rental distress due to coronavirus. You can have a look here for more information.

And there are some temporary changes of bankruptcy and insolvency laws which you may like to keep up to date with and you can find more information here.

DEALING WITH INDEPENDENT CONTRACTORS AND EMPLOYEES

If you have independent contractors or are outsourcing, have you rearranged your staffing levels? Start talking with your contractors now about whether they are needed or not, and if they are, for how long?

And perhaps the elephant in the room, are you protecting your workers from coronavirus?

You have an obligation to keep a healthy workplace during this time, and you need to ensure you can do so. This involves encouraging people to following guidelines from World Health Organisation on infection control, including cleaning hands, covering mouth and nose, and avoiding close contact with anyone with fever or cough. You also need to ensure any employees notify you of potential contraction and seek medical attention urgently; that they stay away. You can require them to provide medical certificates and medical clearances. You should do a daily risk assessment of your business operations during this time, and of course anyone that can work from home, should. There is also some great information on the Safework NSW website here. 

If the government orders your business to fully shut down due to COVID-19, and your employees can’t usefully be employed, you may be able to stand them down without pay. BUT this area of law is complex. You need to be very careful and seek legal advice.

A lawyer will look at the modern award, enterprise agreement or contract of employment, and they will establish if coronavirus is the real reason for the stoppage. They will consider whether there other opportunities for the employee(s) to be useful.

If there is a slowdown, and you want to shut, you will need to keep paying your employees, but you can discuss if they will use their leave, reduce their hours, or offer redundancy. Keep in mind that paying your employees is your obligation. But there have been some innovative measures in place such as where one CEO of a company discussed what he should do with each individual employee, and they came to a solution together.

DEALING WITH THE COMMUNITY – HEALTH INFORMATION AND GIVING HEALTH ADVICE

Unfortunately the importance of collecting and disclosing personal information properly and in compliance with the Australian Privacy Principles is often overlooked at times like these. If you are in the health industry or are collecting information on people’s health you still need to comply with the Australian Privacy Principles. There is some great information about the continued privacy obligations of businesses issued by OAIC here. 

And if you are providing health advice on coronavirus, perhaps on a website, or via email or socials or elsewhere, you should ensure you have adequate disclaimers in place. In many ways it is unchartered territory; you don’t want to find people relying on that advice, and making a claim against you because of it.

We all need to comply with privacy obligations in terms of collecting and disclosing personal and health information during this time.

SOME SANITY CHECKS

This is really a high level list of legals for small business during coronavirus, and the laws are changing rapidly. So please, make sure you get some current legal advice which is specific to your situation. Getting up to date legal advice is more important now than ever.

There are also some sanity checks you can do…

  1. Subscribe to keep updated with the government stimulus packages and any additional offers you can find (such as Facebook marketing). If it is not automatically forthcoming, make sure you make the required applications.
  2. Check your contracts to see if they have envisaged the scenario of a pandemic. This is usually in the form of a “Force Majeure” clause. If you can, get a lawyer to review your contracts and vary them asap, and certainly any new contracts should be written with consideration of the changed world we now find ourselves in. (Whilst the doctrine of frustration may also be applicable in some scenarios, we strongly suggest you seek legal advice).

We provide contract drafting and review services and you can read more here.  Or book in for a free 20 minute consultation here.

Stay healthy, stay safe.

The Mumpreneur Lawyer

A Personal Welcome!!

We made it!! And you made it here!!

I’m so pleased to be able to introduce you to our new website. I think you’ll find that there are some rather useful legal resources for you in the way of legal guides which will gradually be released. They are for online stores, VAs, life and business coaches, marketers, social media managers, and more.

It’s certainly been a big project, but I think it showcases our services, and our online packages well. There is so much value to be had on our website visitors, and if you are unsure of what you need my team and I are always here to answer.

Have a look around, and if you haven’t signed up already please make sure you do to keep in touch.

Davina Borrow-Jones
The Mumpreneur Lawyer