Can Your Online Store Have A No Refund Policy?

Mia runs a small online skincare store from Wellington. After a few customers asked to return products because they changed their mind, she added a bold line to her checkout page: No refunds under any circumstances.

It felt simple and protective. But when a moisturiser arrived leaking in the post, a customer asked for a refund and pointed to the Consumer Guarantees Act 1993. Suddenly, Mia's neat policy didn't feel so safe.

If you're writing a refund policy or returns policy for your online store, the good news is you can set clear rules. You just can't use those rules to take away customer rights that New Zealand law already gives them.

Can You Have A No Refund Policy For Your Online Store?

No, not as a blanket rule. A no refund policy for your NZ online store can be misleading if it suggests customers can never get a refund, even when the Consumer Guarantees Act 1993 gives them that right.

You can say you don't offer refunds for certain voluntary returns, such as change of mind. But you need to make it clear that this doesn't affect a customer's rights under New Zealand consumer law.

The key laws to know for your consumer guarantees policy are:

• Consumer Guarantees Act 1993: gives consumers automatic guarantees when they buy goods or services from your business.
• Fair Trading Act 1986: stops businesses from misleading customers about their rights, including refund rights.
• Privacy Act 2020: matters if you collect personal information during returns, such as names, addresses, order details and photos of faulty products.

So, instead of saying No refunds, a safer approach is something like:

We don't offer refunds for change of mind. If your product is faulty, not as described, or doesn't meet the guarantees under the Consumer Guarantees Act 1993, we'll provide the remedy required by law.

That wording tells customers where you stand, without overstating what you can refuse.

When Does The Consumer Guarantees Act Require A Refund?

The Consumer Guarantees Act doesn't require a refund for every problem, but it can require one where a product has a serious failure or where you don't fix a minor failure within a reasonable time.

If you sell to customers in trade, the goods you supply usually need to:

• be of acceptable quality
• be fit for their usual purpose
• be fit for any specific purpose the customer told you about
• match the product description, sample or model
• arrive in a condition and timeframe that meets the relevant consumer guarantees

If the issue is minor, you can usually choose whether to repair, replace or refund the product. For example, if a zip on a bag is faulty but can be repaired quickly, a repair may be enough.

If the issue is serious, the customer can usually choose between a refund, a replacement, or keeping the goods and claiming compensation for the drop in value.

A Worked Example

Say Mia sells a $89 moisturiser and charges $7 for delivery. The product page says the bottle has a sealed pump, but the customer receives it half-empty because the pump has leaked during shipping.

This isn't just a change of mind return. The product hasn't arrived in acceptable condition and doesn't match what the customer reasonably expected. If the failure is serious, Mia may need to refund the $89 and the delivery charge connected to that order, or provide another remedy the customer is legally entitled to choose.

If Mia's terms say We never refund delivery fees, that wording could cause problems where the law requires the customer to be put back in the position they should have been in.

Can A Business Refuse A Refund In New Zealand?

Yes, you can refuse a refund in some situations, but not where the Consumer Guarantees Act gives the customer a right to one.

You can usually refuse a refund where the customer simply:

• changed their mind
• found the product cheaper somewhere else
• ordered the wrong size, colour or style
• no longer wants the item
• damaged the product after receiving it
• used the product in a way that wasn't intended

You can also set reasonable conditions for voluntary returns in your customer contracts. For example, you might offer change of mind returns within 14 days if the item is unused, unopened, in original packaging and returned with proof of purchase.

That type of policy is a customer service choice. Once you offer it, you should honour it and apply it consistently.

There are some products where stricter change of mind rules make sense, such as:

• personalised or custom-made products
• sealed hygiene products that have been opened
• perishable goods
• digital products that have already been accessed or downloaded
• limited-release items where resale is difficult

Even then, your policy should separate change of mind returns from legal rights. A custom product can still be faulty. A sale item can still be defective. A clearance item can still be different from its description.

If you sell to another business, different rules may apply. The Consumer Guarantees Act allows some business-to-business transactions to contract out of its guarantees, but only where both parties are in trade, the contract is in writing, and the contracting out is fair and reasonable. That wording needs care, especially if your store sells to both consumers and businesses.

What Should Your Ecommerce Returns Policy Say?

Your ecommerce returns policy should clearly explain what customers can return, when they can return it, who pays return shipping, and how you handle faulty products.

A good policy doesn't need to be long or scary. It should be easy for customers to understand at the point they buy, because hidden or confusing refund rules are more likely to create complaints.

Use This Fill-In Outline

This outline isn't a finished legal document. It's a practical starting point, and a lawyer should tailor it before you use it for your store.

1. Customer Rights Statement: say your policy doesn't limit rights under the Consumer Guarantees Act 1993 or Fair Trading Act 1986.
2. Change Of Mind Returns: state whether you accept them, the return window, item condition and any exclusions.
3. Faulty Or Incorrect Products: explain how customers can contact you and what information you need to assess the issue.
4. Remedies: explain that repair, replacement, refund or other remedies will be offered where required by law.
5. Return Shipping: say who pays for return shipping for change of mind returns, and how shipping is handled where the product is faulty or incorrectly supplied.
6. Refund Method: explain whether refunds go back to the original payment method, and when store credit is only used if the customer agrees.
7. Proof Of Purchase: set out what you'll accept, such as an order number, receipt or email confirmation.
8. Timeframes: give realistic timeframes for assessing returns and processing refunds after you receive the item or confirm the issue.
9. Excluded Products: list any products that aren't eligible for change of mind returns, such as opened hygiene items or personalised goods.
10. Privacy: explain that you'll only collect return information you reasonably need to process the request.

For example, if you sell activewear online, your policy might say customers have 21 days to return unworn full-priced items for a store credit if the size isn't right. But the same policy should also say that faulty stitching, incorrect items or products that don't match their description will be handled under the Consumer Guarantees Act.

What Wording Should You Avoid In Your Refund Terms?

You should avoid wording that makes customers think they have fewer rights than they really do. The Fair Trading Act 1986 can apply if your terms, product pages, checkout wording or customer service scripts mislead customers about refunds.

Be careful with phrases like:

• No refunds under any circumstances
• All sales are final
• No refunds on sale items
• Store credit only for faulty items
• You must contact the manufacturer, not us
• We aren't responsible once the product has been shipped

Some of these phrases can be used in a limited way, but they need context. For example, all sales are final for change of mind returns is very different from all sales are final with no consumer law carve-out.

A safer version might be:

Sale items can't be returned for change of mind unless we say otherwise. If a sale item is faulty, not as described, or doesn't meet a consumer guarantee, we'll provide a remedy required by New Zealand law.

You should also check your refund wording across your whole store, not just the returns page. Customers often see refund statements in:

• product descriptions
• FAQs
• checkout pages
• order confirmation emails
• social media comments and direct messages
• customer service scripts

If those messages don't match, your team may accidentally promise something you didn't intend, or refuse something the customer is entitled to receive.

How Should You Handle A Refund Request In Practice?

You should handle refund requests with a simple process that separates legal claims from voluntary change of mind returns.

When a customer contacts you, don't jump straight to our policy says no. First, work out why they're asking for the return.

1. Ask For The Basics: get the order number, product name, purchase date and reason for the return.
2. Check The Category: decide whether it's a change of mind request or a possible Consumer Guarantees Act issue.
3. Ask For Evidence Where Reasonable: photos, videos or a short description can help you assess faults or damage.
4. Review Your Product Page: compare the customer's complaint with what you advertised, promised or showed in photos.
5. Choose The Right Remedy: for minor issues, you may be able to repair, replace or refund; for serious issues, the customer may have more choice.
6. Respond In Writing: confirm what you've decided, what happens next and any timing you can commit to.
7. Keep Records: save messages, photos, tracking details and refund confirmations in case you need to review the decision later.

This process also helps your business spot patterns. If five customers return the same dress because the sizing runs smaller than the size chart, the legal issue may not be the returns policy. It may be the product description, complaints handling process or a broader product issue.

When you collect return information, keep privacy in mind. Under the Privacy Act 2020, you should only collect personal information you need, tell customers why you're collecting it, store it safely and avoid keeping it longer than necessary.

If a refund request is high value, unusual, or tied to a broader product issue, it's worth getting tailored advice before you respond. A careful reply early on can stop a small issue from becoming a costly customer complaint.

Key Takeaways

• A blanket no refunds policy is risky for an online store in New Zealand.
• You can refuse refunds for change of mind if your policy clearly says so and you apply it fairly.
• You can't use your terms to remove rights customers have under the Consumer Guarantees Act 1993.
• Your returns policy should clearly separate voluntary returns from faulty, incorrect or misdescribed products.
• Avoid wording that suggests sale items, custom items or delivered items can never be refunded.
• Keep your product pages, checkout wording, FAQs and customer service replies consistent.

If you'd like help with your online store terms, refund and returns policy, consumer law wording or ecommerce contract setup, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.