Can A Business Refuse A Refund For Custom Orders?

Personalised and made-to-order products can be tricky when a customer changes their mind. You've spent time, materials and care creating something that may be hard, or impossible, to resell.

The good news is that New Zealand law does let you set sensible limits on change-of-mind refunds for custom orders. The catch is that your refund policy still needs to sit within the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.

So, can you say no to a refund for bespoke goods? Often yes, but not always. The safest approach is to separate change-of-mind situations from faulty, late, misdescribed or misleading custom goods.

Can You Refuse A Refund For A Custom Order?

Yes, you can usually refuse a refund for a custom order if the customer simply changes their mind, as long as your terms were clear before they bought and the product complies with consumer guarantees.

In New Zealand, customers don't have a general legal right to return a product just because they:

• Changed their mind
• Ordered the wrong size, colour, name or wording
• No longer need the item
• Found a cheaper option elsewhere
• Didn't read the product description carefully

That matters for personalised goods because you may not be able to resell them. A mug with someone's pet's name on it, a custom bridesmaid dress, engraved jewellery or a made-to-measure cabinet isn't the same as a standard item sitting on a shelf.

However, you can't use a custom order refund policy to remove rights customers have under the Consumer Guarantees Act. If the product is faulty, unsafe, materially different from what you described, or not fit for a purpose the customer told you about, you may still need to repair, replace, refund or compensate the customer.

You also need to be careful under the Fair Trading Act. A policy that says no refunds under any circumstances can be misleading if it makes customers think they have no rights when the law says they do.

What Counts As A Custom Or Made-To-Order Product?

A custom or made-to-order product is usually something you create, alter or source specifically for that customer's order, rather than selling from standard stock.

This can include:

• Personalised items, such as engraved gifts, monogrammed clothing or printed products
• Made-to-measure goods, such as curtains, uniforms, cabinets or furniture
• Products manufactured after the customer chooses specific dimensions, materials or finishes
• Bespoke artwork, signage, branding items or promotional products
• Custom bundles or special orders that you can't easily resell

The label matters less than the reality. If the customer is choosing from standard options and the item can be resold easily, a strict no change-of-mind refund position may feel less commercially fair, even if you may still be legally allowed to set that policy.

For example, if you sell T-shirts in standard sizes and colours, and the only choice is selecting from your normal range, that may not feel very custom. If you print a customer's business logo across 200 shirts after they approve the artwork, that's a very different situation.

Do Consumer Guarantees Apply To Personalised Goods?

Yes, consumer guarantees apply to personalised goods sold to consumers in New Zealand, unless a limited business-to-business exception applies.

Under the Consumer Guarantees Act, goods you supply to a consumer must meet certain guarantees. For custom products, the main ones are that the goods must:

• Be of acceptable quality, including being safe, durable and free from defects that a reasonable customer wouldn't expect
• Match their description
• Match any sample or demonstration model, where relevant
• Be fit for their normal purpose
• Be fit for any particular purpose the customer told you about and relied on you for
• Be delivered within the agreed time, or within a reasonable time if no time was agreed

Services connected with custom products can also have guarantees. For example, if you design, install, alter or manufacture something as part of the order, you may need to provide those services with reasonable care and skill.

Example: Personalised Product With A Fault

Say Maia runs an online store selling personalised baby blankets. A customer orders a blanket embroidered with the name Ari, approves the spelling and receives the item on time. A week later, the stitching starts unravelling because of poor workmanship.

Maia can't refuse help just because the blanket is personalised. The issue isn't that the customer changed their mind. The product may have failed to meet the guarantee of acceptable quality, so Maia may need to offer a repair, replacement or refund depending on the seriousness of the problem.

Example: Customer Error In A Custom Order

Now say the customer typed the name as Arie, approved the preview and later realised they wanted Ari. If the blanket was made exactly to the approved details and there was no misleading conduct by Maia's business, Maia can usually rely on her no change-of-mind policy.

That outcome becomes much easier to justify if Maia's checkout process required the customer to confirm the spelling and accept that personalised items can't be returned for customer input errors.

When Can You Say No To A Change-Of-Mind Refund?

You can usually say no to a change-of-mind refund when your policy is clear, the customer agreed to it before ordering, and your business has delivered what was promised.

A strong change-of-mind policy for custom products usually says:

• Custom and personalised orders are final once production has started
• Customers are responsible for checking names, wording, measurements and artwork before approval
• Colours may vary slightly where that's genuinely unavoidable, such as screen display differences
• Deposits or design fees may be non-refundable once work has begun
• Cancellations may only be accepted before a stated production stage
• The policy doesn't limit the customer's rights under the Consumer Guarantees Act

The timing matters. If the customer only sees your no-refund term after they pay, it may be much harder to rely on it. Put the key terms where customers will actually see them, such as:

• On the product page
• Near the personalisation fields
• At checkout before payment
• In your order confirmation email
• In your website terms, customer contracts and refund policy

For higher value orders, it can help to use a written quote or order form that records the specifications, payment stages and cancellation rules. Templates can be a useful starting point, but custom product terms work best when they reflect how your business actually takes orders, approves designs and starts production.

When Must You Offer A Refund, Repair Or Replacement?

You may need to offer a remedy when the custom product fails to meet a consumer guarantee or when your business has misled the customer.

The right remedy depends on what went wrong and how serious it is.

If The Problem Is Minor

If the issue is minor and can be fixed within a reasonable time, you can usually choose the remedy. That may be a repair, a replacement or another practical fix.

For example, if a personalised sign arrives with a small loose fitting that can be repaired quickly, you may be able to repair it rather than immediately refund the full order.

If you don't fix a minor problem within a reasonable time, the customer may be able to reject the goods and ask for a refund, or have the problem fixed elsewhere and recover reasonable costs from you.

If The Problem Is Serious

If the failure is serious, the customer may be able to choose between a refund or replacement, and may also claim compensation for reasonably foreseeable loss.

A serious failure can include situations where:

• The product is substantially unfit for its normal purpose and can't easily be fixed
• The product is unsafe
• The product is significantly different from its description or sample
• A reasonable customer wouldn't have bought it if they knew about the problem

For a custom order, this might be a made-to-measure item that's the wrong dimensions because your business measured incorrectly, or custom printed uniforms that are materially different from the approved design.

If Your Marketing Was Misleading

If your advertising, product page or sales process gave the customer the wrong impression, the Fair Trading Act can also become relevant. You can't make misleading claims about a product's quality, origin, materials, availability, timing or the customer's legal rights.

For example, if your website says a custom item is made from genuine leather but it's actually synthetic, you may not be able to rely on a no-refund policy. The customer bought based on a key claim that wasn't true.

Can Your Refund Policy Say No Refunds On Custom Products?

Yes, your refund policy can say you don't offer refunds for change of mind on custom products, but it shouldn't say or imply that customers have no legal rights at all.

A safer way to phrase it's to be specific. Instead of saying all custom orders are non-refundable, you might say something like:

Because custom and personalised products are made specifically for you, we don't offer refunds or exchanges if you change your mind, choose the wrong size or provide incorrect personalisation details. This doesn't limit your rights under the Consumer Guarantees Act 1993 if the product is faulty, not as described or otherwise fails to meet a consumer guarantee.

You should adapt wording like this to your products and ordering process. For example, a made-to-measure furniture maker will need different terms from a business selling personalised candles online.

Your policy should also explain your complaints handling process if something goes wrong. Customers are more likely to trust your business when they know what to do.

Consider covering:

• How quickly customers should contact you after noticing a problem
• What photos, videos or information they should provide
• Whether you need the item returned or inspected
• Who pays return shipping where the product is faulty
• What happens if the customer gave incorrect measurements or artwork
• How you handle repairs, remakes, replacements and refunds

Be careful with deadlines. You can ask customers to contact you promptly, but you can't cut off Consumer Guarantees Act rights simply because a customer missed a very short internal deadline.

What Should Your Custom Order Terms Include?

Your custom order terms should explain exactly when the order becomes binding, what the customer must approve, and what happens if the order changes or is cancelled.

For many custom product businesses, the most useful terms cover these areas.

Order Details And Customer Approval

Record the details that matter. Depending on what you sell, this might include:

• Names, dates, wording and spelling
• Measurements and dimensions
• Colours, materials and finishes
• Artwork, logos and file requirements
• Quantity and product variations
• Delivery address and delivery method

If you send a proof, mock-up or sample, make it clear when the customer is approving it for production. Keep records of approvals, especially for expensive or highly personalised products.

Deposits, Cancellations And Production Stages

If you take deposits, explain when they become non-refundable and why. A deposit should reflect real business costs, such as design time, materials ordered or production capacity reserved.

A cancellation clause is often more reasonable if it works in stages. For example:

• Before design work starts, the customer may cancel for a full refund
• After design work starts, a design fee may be kept
• After materials are ordered, material costs may be deducted
• After production starts, the order may be non-cancellable unless required by law

A harsh term that lets your business keep a large amount unrelated to your actual loss may be harder to defend, especially in a consumer sale.

Delivery Times

If timing is crucial, say so clearly. The Consumer Guarantees Act includes guarantees around delivery, and missed timing can be a real issue for events, weddings, corporate launches and seasonal products.

Use realistic production timeframes and avoid promising delivery dates you can't control. If your timeframe depends on the customer approving artwork or providing measurements, say that the clock starts after you receive everything needed to begin.

Customer-Supplied Artwork And Intellectual Property

If customers upload logos, photos, artwork or text, your terms should say they must have the right to use that material. Otherwise, your business could be pulled into copyright or trade mark issues.

You may also want permission to use the customer's material only as needed to complete the order. If you want to use photos of finished custom work in your portfolio or social media, ask for clear permission rather than assuming it's okay.

Privacy And Personal Information

Custom orders often involve personal information, such as names, dates, photos, addresses and contact details. If you collect, store or use that information, the Privacy Act 2020 may apply to your business.

Keep customer information secure, collect only what you need, and be clear in your privacy policy about how you use it. This is especially important if you use third-party printers, manufacturers, couriers or offshore suppliers.

Can You Contract Out Of Consumer Guarantees For Business Customers?

Sometimes, yes. If you sell goods or services for business purposes, the Consumer Guarantees Act allows you to contract out of the Act in writing if it's fair and reasonable to do so.

This is mainly relevant for business-to-business custom orders, such as branded uniforms, custom packaging, signage, promotional products or manufactured components.

To rely on this exception, you need more than a casual statement on an invoice. Your product supply agreement or terms should clearly say that the parties agree to contract out of the Consumer Guarantees Act to the extent permitted by law for goods or services supplied for business purposes.

Even then, contracting out won't always solve everything. The term needs to be fair and reasonable, and you still need to comply with the Fair Trading Act. You also can't contract out for consumer purchases.

If you sell to both consumers and businesses, your terms should treat those customers differently. Using one blunt no-refund statement for everyone can create unnecessary risk.

Common Mistakes To Avoid

The biggest mistake is treating every refund request the same. A customer who changes their mind is very different from a customer who received a faulty or misdescribed product.

Watch out for these common problems:

• Saying no refunds ever: This can mislead customers about their rights under the Consumer Guarantees Act.
• Hiding key terms: If your no change-of-mind policy is buried after checkout, customers may say they never agreed to it.
• Skipping written approvals: Without proof of approved wording, measurements or artwork, it can be hard to show who made the error.
• Overpromising delivery dates: Custom work often depends on suppliers, couriers and customer approvals, so build in realistic timing.
• Keeping deposits without a clear basis: Your cancellation terms should line up with your real costs and production stages.
• Forgetting customer data: Personalised orders can involve sensitive or personal information, so privacy processes matter too.

A clear process protects both sides. It helps customers understand what they're agreeing to, and it gives your team a consistent way to handle orders when things get busy.

Key Takeaways

• You can usually refuse a change-of-mind refund for custom or personalised goods if your terms are clear and the product is as promised.
• You can't remove a customer's rights under the Consumer Guarantees Act for consumer purchases.
• Faulty, unsafe, misdescribed or misleading custom products may still require a repair, replacement, refund or compensation.
• Your refund policy should say that no change-of-mind refunds apply to custom orders, while preserving legal rights for faulty goods.
• Use clear approvals, production stages, cancellation terms and delivery wording so everyone knows where they stand.
• For business customers, you may be able to contract out of the Consumer Guarantees Act in writing if it's fair and reasonable.

If you'd like help with your custom order terms, refund policy, website terms or consumer law compliance, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.