How Can Your Business Comply With Consumer Guarantees? (2026 Updated)

If you sell products or services in New Zealand, consumer guarantees probably apply to you - even if you’re a tiny business, you sell online, or you only make sales “sometimes”.

And if you’ve ever had a customer ask for a refund, replacement, repair, or compensation (or left a not-so-great review when you said no), you’ve already seen how important it is to get this right.

This guide is updated for current expectations and enforcement focus, and it’ll walk you through what the consumer guarantees are, when they apply, and the practical steps you can take to build consumer guarantee compliance into your day-to-day operations.

Note: This article is general information only. The right answer can depend on what you sell, how you describe it, and who you sell to, so it’s always worth getting tailored advice if you’re unsure.

What Are “Consumer Guarantees” In New Zealand?

In New Zealand, “consumer guarantees” are the automatic legal promises that apply when you sell goods or services to a consumer.

They mainly come from the Consumer Guarantees Act 1993 (CGA). The CGA is designed to make sure everyday buyers get what they paid for, and that businesses can’t contract out of basic standards in most consumer transactions.

Broadly speaking:

• Goods you sell must meet certain minimum standards (for example, being of acceptable quality and matching their description).
• Services you provide must be carried out with reasonable care and skill, and within a reasonable time (and at a reasonable price where price wasn’t agreed beforehand).

Consumer guarantees often work alongside other key laws, especially the Fair Trading Act 1986 (FTA), which focuses on truthful advertising and not misleading customers. So even if you “handle refunds well”, you can still get into trouble if your advertising or product descriptions are misleading.

If you want your customer-facing terms to support (not contradict) your legal obligations, having well-drafted Business Terms can make a big difference.

When Do The Consumer Guarantees Apply?

The CGA generally applies when you supply goods or services to someone who is buying for personal, domestic, or household use (or consumption) - that is, they’re acting as a consumer.

It can also apply in some business-to-business situations, depending on what’s being bought and how it’s used. The “consumer vs business customer” line isn’t always as simple as it sounds, so this is a common area where it’s worth getting advice early.

Can You “No Refunds” Your Way Out Of It?

In most consumer transactions, no.

Signs like “No refunds” or “No returns on sale items” can be unlawful if they suggest customers have fewer rights than they actually do. Even if your intentions are good (like preventing change-of-mind returns), the way you communicate it matters.

A safer approach is using clear wording that separates:

• Change-of-mind situations (which you can choose to allow or not), and
• Faulty / not as described situations (where CGA remedies can apply).

What Guarantees Apply To Goods And Services (In Plain English)?

To comply with consumer guarantees, you need to understand what promises the law automatically attaches to what you sell.

Here are the key ones businesses deal with most often.

Guarantees For Goods

If you sell goods, common CGA guarantees include:

• Acceptable quality: the product should be safe, durable, and free from defects (considering its price, description, and what a reasonable consumer would expect).
• Fit for purpose: if the customer relies on your advice that it will do a certain job, it needs to do that job.
• Match description and sample: what you deliver needs to align with what you advertised or displayed.
• Spare parts and repairs: spare parts and repair facilities need to be reasonably available for a reasonable time (unless you clearly tell the customer otherwise before purchase).
• Clear title and undisturbed possession: the customer should legally own the item and not have it taken away due to someone else’s claim.

Practical example: If you sell “waterproof” jackets online and customers find the jacket leaks in light rain, that’s not just a customer service issue - it’s potentially a CGA issue (and it may also raise FTA issues if the waterproof claim wasn’t accurate).

Guarantees For Services

If you supply services, common CGA guarantees include:

• Reasonable care and skill: you must perform the service to a competent standard.
• Fit for purpose / achieve result: if the customer tells you what result they want, and you agree you can deliver it, the service must be fit to achieve that result.
• Reasonable time: if you didn’t agree on a timeframe, the service must be completed within a reasonable time.
• Reasonable price: if price wasn’t agreed, the price charged must be reasonable.

Practical example: If you run a home renovation service and a job is carried out poorly, the customer may be entitled to have it remedied, or may seek a refund or compensation depending on the seriousness of the issue.

How Do Refunds, Repairs, Replacements And Compensation Work Under The CGA?

This is where many businesses get stuck - not because they don’t want to do the right thing, but because the rules change depending on how serious the issue is.

Goods: “Minor” vs “Substantial” Failures

For goods, remedies often depend on whether the problem is a minor failure or a substantial failure.

In simple terms:

• Minor failure: can be fixed within a reasonable time. In many cases, you can choose to repair, replace, or refund (depending on what’s appropriate).
• Substantial failure: the issue is significant (for example, it’s unsafe, it’s very different from the description, or it can’t be fixed easily). In these cases, the customer may be entitled to reject the goods and choose a refund or replacement.

Tip: Train your team (or write yourself a short script) to avoid arguing about labels like “minor” or “major”. Focus on facts: what’s wrong, how quickly it can be fixed, and what outcome the customer is asking for.

Services: Fix It Or Refund It (Depending On The Situation)

For services, customers may be entitled to remedies such as:

• Having the service remedied (fixed) within a reasonable time, or
• Cancelling the contract and getting a refund (where the failure is substantial or can’t be fixed), and/or
• Compensation for reasonably foreseeable loss caused by the failure.

This is one reason it’s so important to set expectations upfront in quotes, scope of work documents, and customer terms. If you’re changing what you deliver mid-project, get the variation in writing.

Don’t Forget Consequential Loss

Sometimes the customer’s complaint isn’t just “the product is faulty” - it’s “the faulty product caused me a loss”. Under the CGA, consumers may be able to claim compensation for reasonably foreseeable loss or damage resulting from the failure.

That doesn’t mean you’re automatically liable for every possible knock-on effect - but it does mean you should treat complaints seriously and document what happened.

What Steps Should You Take To Comply Day-To-Day?

Compliance isn’t just about what you do when something goes wrong. It’s about how your business is set up so you reduce disputes in the first place, and handle issues consistently when they do happen.

1) Make Your Advertising And Descriptions Accurate

Most consumer disputes start with mismatched expectations.

To reduce risk under both the CGA and the Fair Trading Act 1986, check that your:

• product descriptions are accurate and not exaggerated (especially claims like “guaranteed”, “permanent”, “waterproof”, “medical grade”, “results in 7 days”)
• photos represent what customers will actually receive (including colour, size, and inclusions)
• pricing is clear (including delivery fees, subscriptions, add-ons, and minimum terms)
• customer testimonials aren’t presented in a misleading way

If you run an eCommerce store, it’s also worth making sure your customer-facing site documents are consistent across pages (product pages, FAQs, checkout, and confirmation emails).

2) Use Clear Customer Terms (But Don’t Try To Contract Out)

Having customer terms isn’t about dodging the CGA - it’s about clarity and process.

Your terms should clearly cover things like:

• shipping and delivery timeframes
• what happens if an item is damaged in transit
• how customers can raise an issue (and what info you need)
• change-of-mind returns (if you offer them) and time limits
• repair, replacement, or refund processes

For online businesses, a strong set of Online Shop Terms and Conditions can help set expectations and reduce repetitive back-and-forth when issues arise.

3) Have A Simple Refunds/Returns Policy Your Team Can Actually Follow

Even if you’re the only person in the business right now, write the policy as if someone else will handle it tomorrow.

A practical refunds/returns policy should include:

• where customers send returns
• who pays return postage in different scenarios
• what evidence you require (photos, proof of purchase, serial number)
• how quickly you’ll respond
• how you’ll handle disputes or escalations

The goal is consistency. Inconsistent handling (for example, refunding one customer but refusing the next for the same issue) is how complaints escalate.

4) Keep Good Records (They’re Your Best Friend In A Dispute)

When a complaint arises, good records can quickly show what was promised and what was delivered.

Make sure you keep:

• product specs, supplier info, batch numbers (where relevant)
• proof of purchase (invoices, order confirmations)
• customer communications (emails, chat logs)
• photos of condition on arrival (especially for high-value items)
• service scope documents, variations, and sign-off documents (for service businesses)

If you record calls with customers (for customer service or quality control), make sure you understand your privacy obligations - the rules matter. It’s worth checking the basics in Business Call Recording Laws so your complaint handling doesn’t create a separate compliance problem.

5) Make Sure Your Privacy Settings Match Your Customer Processes

Consumer guarantee disputes often involve customers sending you personal information (photos, addresses, sometimes health-related info depending on what you sell).

If you collect and store customer info, you’ll generally need to comply with the Privacy Act 2020. In practice, that means being clear about what you collect, why, where you store it, and who you share it with.

Having a properly drafted Privacy Policy helps set expectations and supports your complaint process (especially if you use third-party platforms for fulfilment, email marketing, or customer support).

What Are The Common Mistakes That Put Businesses At Risk?

Most CGA issues aren’t caused by “bad businesses”. They’re usually caused by rushed processes, unclear messaging, and DIY policies copied from overseas websites.

Here are some common traps to avoid.

Saying “No Refunds” Without Explaining CGA Rights

You can have a no-change-of-mind returns policy, but you can’t suggest customers don’t have rights for faulty or misdescribed goods.

If you’re using signage, website banners, or receipt wording, keep it precise.

Relying On Supplier Policies Instead Of Your Own Obligations

If you sell to consumers, your obligations are to the consumer - even if the issue started with your supplier or manufacturer.

That means you might need to provide the remedy to the customer first, and then pursue your supplier separately. This is one reason it’s smart to have clear supply arrangements and keep supplier communications in writing.

Overpromising In Marketing

Big claims sell, but they also create legal risk.

Review any “absolute” marketing phrases, such as:

• “guaranteed results”
• “won’t break”
• “works for everyone”
• “industry-leading” (if you can’t back it up)

A good rule of thumb: if you’d be uncomfortable saying it in front of a regulator, rewrite it.

Not Training Staff (Or Contractors) Who Deal With Customers

If you have employees or contractors who respond to customer complaints, they need a clear process and escalation path.

Otherwise, they might accidentally:

• admit liability too early
• deny rights incorrectly
• offer inconsistent remedies
• commit to outcomes you can’t actually deliver

If you’re hiring, it’s also worth making sure your internal expectations are supported by your Employment Contract and policies (for example, who can approve refunds, and up to what amount).

Using Generic Templates That Don’t Match NZ Law

Overseas templates (especially from the US, UK, or Australia) often don’t reflect New Zealand consumer law, and can include clauses that don’t work here.

This can backfire in two ways:

• your terms don’t actually protect you, and
• your terms create misleading impressions about customer rights.

Getting your terms tailored to what you sell, where you sell, and how you deliver is one of the simplest ways to reduce consumer disputes long-term.

Key Takeaways

• In New Zealand, consumer guarantees under the Consumer Guarantees Act 1993 can apply automatically when you sell goods or services to consumers.
• You generally can’t contract out of consumer guarantees for consumer transactions, and “no refunds” messaging can be risky if it suggests customers have fewer rights than they do.
• Goods must be of acceptable quality, match description, and be fit for purpose, while services must be carried out with reasonable care and skill (and within a reasonable time).
• Refunds, repairs, replacements, cancellations, and compensation depend on what went wrong and how serious the failure is, so your team should have a consistent process for assessing complaints.
• Clear customer terms, accurate advertising, solid record-keeping, and privacy-compliant complaint handling are practical steps that make consumer guarantee compliance much easier.
• Many disputes can be avoided by aligning your website wording, policies, and internal processes - and getting tailored legal help instead of relying on generic templates.

If you’d like help reviewing your customer terms, advertising claims, refunds processes, or consumer law compliance, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.