Do suppliers have to give a refund when the consumer changes their mind?
Suppliers do not have to give a refund when a consumer simply changes their mind about the service.
But suppliers can have a policy to offer a refund or credit note when this happens, particularly if the consumer notifies the supplier within a specified timeframe. If so, they must abide by this policy.
Who has to fix a problem with a service?
When goods fail to meet a guarantee, the consumer has a right to a ‘remedy’ - an attempt to put the situation right. Common remedies include repair, replacement and refund.
Suppliers must give a remedy when their services are not provided:
- with due care and skill
- which are fit for any specified purpose
- within a reasonable time (when no time is set).
Whether a supplier offers a repair, refund or other ‘remedy’ depends on whether the problem is a:
- major failure
- minor failure.
Consumer guarantees apply to both.
When services fail to meet a consumer guarantee, the consumer may also be able to claim for consequential losses – compensation for costs to the consumer in time and money because something went wrong with the goods or services. For more information, view our Damages and compensation page.
Handling major problems with services
A major failure with services is when:
- a reasonable consumer would not have acquired the services if they had known the nature and extent of the problem. For example, a reasonable consumer would not pay to have acrylic nails attached if they knew the nails would fall off within an hour
- the services are substantially unfit for their normal purpose and cannot easily be made fit, within a reasonable time. For example, a carpet-cleaning service changes the colour of the consumer’s carpet in some places
- the consumer told the supplier they wanted a specific purpose but the services, and any resulting product, do not achieve that purpose and cannot easily or within a reasonable time be made to achieve it. For example, a consumer tells a pay TV company they want to watch the Olympics. They sign up to a 24-month contract but the Olympics are over before the company installs the service
- the consumer told the supplier they wanted a specific result but the services, and any resulting product, do not achieve that result and cannot easily or within a reasonable time be made to achieve it. For example, a consumer asks a technician to increase the memory capacity of the consumer’s computer. When installing an extra drive, the technician damages the hard drive. Repairs will take six weeks but the consumer needs the computer within a week
- the supply of the services has created an unsafe situation. For example, an electrician incorrectly wires wall sockets in a consumer’s new kitchen, which makes the electrical outlets unsafe.
When there is a major failure with a service, the consumer can choose to:
- terminate the service contract and get a refund, or
- bring an action against the trader to keep the contract and get compensation for the difference in the service delivered and what they paid for.
The consumer may also be able to bring an action against the trader to recover damages for any loss or damage suffered by the consumer as a result of the trader’s failure to comply with a consumer guarantee.
The consumer gets to choose, not the supplier.
For example:
A consumer has signed a contract for the printing of a book, which specifies that all content be in font size 20. The book is completed with all content printed in font size 8. Because the printer has not met the standard required by the contract, or acted with due skill and care, the consumer is entitled to terminate the contract or bring an action against the printer for compensation and/or damages.
Handling minor problems with services
For minor problems that can be fixed, the consumer cannot cancel and demand a refund immediately.
They must give the supplier an opportunity to fix the problem. The supplier must do this:
- free of charge, and
- within a reasonable time. This depends on the circumstances.
For example:
A reasonable time to fix a problem with a haircut would be much shorter than the reasonable time to fix a problem with a landscaping project.
If suppliers refuse to fix the problem or takes longer than a reasonable time, the consumer can:
- get someone else to deliver the service and ask the supplier to pay reasonable costs, or
- terminate the contract and bring an action against the supplier to refund some or all of their money back, if they have already paid. A consumer who has not yet paid, or only partly paid, can refuse to pay for the defective services at all, or pay less than the agreed price.
A reasonable cost would be within the normal range charged by suppliers, and include:
- the cost of the repair
- any other associated costs (for example, transport costs).
A consumer must apply to a court for damages or compensation for their loss or damage resulting from a trader’s failure to comply with consumer guarantees.
Last updated: 16/05/2012