Can You Ban Refunds For Sale Items In NZ?

Yes, you can refuse refunds for sale items in New Zealand if the customer has simply changed their mind. But you can't use a blanket no refunds on sale items rule to get around your obligations when an item is faulty or doesn't meet the Consumer Guarantees Act 1993.

That's where many refund policies get into trouble. A sign that says no refunds on sale items might feel clear to your team, but it can be misleading if it suggests customers have no rights at all.

The practical answer is to separate two things: your voluntary change-of-mind policy, and your legal obligations for faulty or misdescribed goods. Once you make that distinction, your refund policy wording becomes much easier to get right.

Can You Say No Refunds On Sale Items In NZ?

Yes, you can say no refunds for sale items where the customer has changed their mind, but you need to make it clear that this doesn't remove their rights under the Consumer Guarantees Act 1993.

A change of mind usually means the customer:

• Decided they don't like the colour or style
• Bought the wrong size
• Found the same item cheaper somewhere else
• No longer needs the item
• Bought too many items

New Zealand consumer law doesn't force you to offer refunds in those situations, unless your own policy or advertising says you will. If you promise 14-day returns, free exchanges or money-back returns on your website or in your terms of sale, you need to honour that promise.

Sale items don't get special treatment under the law just because they're discounted. The discount only matters if the customer is asking for a change-of-mind return, or if the item was discounted because of a specific fault that you clearly pointed out before the sale.

So, instead of using a bare statement like No refunds on sale items, a safer approach is wording like:

We don't offer refunds or exchanges for change-of-mind purchases on sale or clearance items. This doesn't affect your consumer guarantees under the Consumer Guarantees Act 1993.

That wording tells customers what your store policy is, while still recognising the legal rights you can't contract out of.

What Does The Consumer Guarantees Act Require?

The Consumer Guarantees Act 1993 requires goods sold to consumers to meet certain guarantees, even if the goods are on sale, discounted, clearance or bought online.

For retailers, the main guarantees are that goods must:

• Be of acceptable quality
• Be fit for their usual purpose
• Be fit for a particular purpose the customer told you about and relied on you for
• Match their description, sample or demonstration model
• Be supplied with clear title, unless the customer was told otherwise
• Have spare parts and repair facilities available for a reasonable time, where that applies

If an item doesn't meet one of these guarantees, the customer may be entitled to a repair, replacement, refund or compensation, depending on the problem.

If the problem can be fixed within a reasonable time, you can usually choose whether to repair, replace or refund. If the problem is serious, the customer can usually reject the goods and choose a refund or replacement.

There isn't a fixed number of days that applies to every refund under the Consumer Guarantees Act. What counts as a reasonable time depends on the product, the fault, how the product is normally used, and what a reasonable customer would expect.

A Simple Sale Item Example

Say Hana runs an online clothing store. She sells a jacket that was $180, reduced to $90 because it's last season's colour. A customer buys it, tries it on at home, and decides the colour doesn't suit them.

If Hana's policy says sale items can't be returned for change of mind, she can usually refuse a refund.

Now say another customer buys the same jacket for $90 and the zip breaks after one week of normal use. The fact it was on sale doesn't remove the customer's Consumer Guarantees Act rights. Hana should assess whether the jacket failed to meet the guarantee of acceptable quality and offer the right remedy.

When Can You Refuse A Refund For A Sale Item?

You can usually refuse a refund for a sale item when the customer has changed their mind, the issue was clearly disclosed before purchase, or the customer caused the damage after buying the item.

Here are the main situations where refusing a refund is often reasonable:

• Change of mind: The customer doesn't like the item, bought the wrong size, or no longer wants it.
• Known fault: The item was discounted because of a fault that you clearly explained before the sale.
• Customer damage: The item was damaged by misuse, an accident, improper care or normal wear and tear.
• Proof issue: The customer can't show they bought the item from you, and you can't verify the purchase another way.
• Hygiene or safety limits: Your policy limits change-of-mind returns for items like cosmetics, underwear or earrings, as long as you still honour consumer guarantees for faulty goods.

Be careful with known faults. It's not enough to quietly put an item on a clearance rack and hope the discount explains everything. If you're selling a dress with a broken clasp, a display table with scratches, or shoes with a visible glue mark, point out the defect clearly on the tag, receipt, product page or at the counter.

For example, if boots are reduced from $120 to $60 and the tag says left zip sticks - sold at discount for this fault, the customer generally can't later demand a refund because of that same zip issue. But if the sole peels off after two weeks of normal wear, that's a different problem and the Consumer Guarantees Act may still apply.

How Should Your Store Refund Policy Be Worded?

Your store refund policy should separate change-of-mind returns from faulty goods, then explain what happens for sale, clearance and online items in plain language.

The Fair Trading Act 1986 also matters here. You must not mislead customers about their rights. The Commerce Commission can take action against misleading refund statements, and serious breaches of the Fair Trading Act can lead to penalties of up to $600,000 for companies and $200,000 for individuals per offence.

Wording like All sale items are final or No refunds under any circumstances can be risky if customers could read it as saying they have no rights for faulty goods.

Wording Principles That Usually Work Better

• Say clearly whether you offer change-of-mind refunds, exchanges or store credit.
• State any different rules for sale and clearance items.
• Add a clear line that customer rights under the Consumer Guarantees Act 1993 still apply.
• Avoid saying or implying that customers can never get a refund.
• Use the same wording across your receipts, website, checkout page, product pages and store signage.
• Train your staff so they don't say something different at the counter or in emails.

A Fill-In Outline For Your Refund Policy

A template can be a helpful starting point, but a lawyer or legal professional should tailor it before you use it. Your products, sales channels and customer promises all affect the wording.

1. Policy Scope: Explain which products and sales channels the policy covers, such as in-store, online and marketplace sales.
2. Change-Of-Mind Returns: Say whether you offer refunds, exchanges or store credit when the customer simply changes their mind.
3. Sale And Clearance Items: Set out any special limits for change-of-mind returns on discounted items.
4. Faulty Goods: Confirm that Consumer Guarantees Act rights still apply and explain the remedies you may offer.
5. Proof Of Purchase: List what you'll accept, such as a receipt, order confirmation or bank statement.
6. Timeframes: Set any store policy time limits for voluntary returns, while making clear that legal rights may still apply outside those timeframes.
7. Refund Method: Explain whether refunds go back to the original payment method and when store credit may be offered.
8. Return Postage: State who pays return shipping for change-of-mind returns and what happens if the item is faulty.
9. Condition Of Returned Goods: Explain packaging, tags and hygiene requirements for voluntary returns.
10. How To Contact You: Give customers a simple process for raising a return request or complaint.

What Should You Do When A Customer Asks For A Refund?

Start by asking why the customer wants to return the item, then work out whether it's a change-of-mind request or a possible Consumer Guarantees Act issue.

This first step matters because your options are different. If the customer simply regrets buying a sale item, you can follow your store policy. If the customer says the item is faulty, unsafe, not as described or not fit for purpose, you need to assess the legal remedy.

A Practical Refund Request Process

1. Check Proof Of Purchase: Ask for a receipt, order number, gift receipt, loyalty account record or bank statement.
2. Ask For The Reason: Record whether it's change of mind, wrong size, fault, damage, missing part or a product description issue.
3. Inspect The Item: Look at the product, photos, packaging and any care instructions.
4. Check What Was Disclosed: Review the sale tag, product page, receipt notes and staff notes to see whether any fault was clearly disclosed.
5. Apply The Right Rule: Use your policy for change-of-mind requests and the Consumer Guarantees Act for faulty goods.
6. Keep A Record: Save photos, customer messages, staff notes and the remedy offered.
7. Escalate Tricky Cases: If the facts aren't clear, get tailored advice before taking a hard line with the customer.

For online stores, make sure your website, customer contracts and checkout wording don't create promises your team can't follow. If your banner says easy returns on everything, but your terms exclude all sale items, customers may say your advertising was misleading.

Also think about return postage. For change-of-mind returns, you can usually say the customer pays return shipping if your policy says so. For faulty goods, you may need to cover reasonable costs connected with returning or assessing the item, depending on the situation.

Good records help you stay consistent. They also make it easier to explain your decision calmly if a customer complains or says your store refund policy is unfair.

Key Takeaways

• You can refuse change-of-mind refunds on sale items in New Zealand if your policy says so.
• You can't use no refunds on sale items wording to remove Consumer Guarantees Act rights for faulty or misdescribed goods.
• Sale, clearance and discounted items still need to be of acceptable quality unless a specific fault was clearly disclosed before purchase.
• Your refund policy should use clear wording for change-of-mind returns, faulty goods, online orders, return postage and proof of purchase.
• The Fair Trading Act 1986 means your signs, website and staff statements must not mislead customers about refund rights.
• Getting your policy tailored to your products and sales channels can help you avoid awkward refund conversations later.

If you'd like help with your refund policy, ecommerce terms, customer-facing wording or Consumer Guarantees Act compliance, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.