Can I Refuse to Give a Customer a Change of Mind Refund in NZ?

When selling goods or services to your customers, you will likely come across times when customers ask for a refund. In some situations, the law will require you to give them a refund. In other instances, however, it is up to your discretion. If a customer has reconsidered a purchase and wants a change of mind refund, it is up to you whether you give them one. This article will explain when you do not have to give customers a refund and when you do.

Do I Legally Have to Give a Customer a Refund if They Change Their Mind?

There are certain situations where the law states that you have to give a customer a remedy for their issue or complaint, including refunds. If a customer’s complaint falls outside of these circumstances, however, then the law does not require you to give them a refund or another kind of remedy. Such times are when a customer:

• changes their mind about their purchase;
• misuses the product or does not follow instructions explaining how to use it properly, and the product breaks;
• modifies or alters the item in some way;
• gets someone else to fix your product before coming back to you;
• breaks, damages, or disposes of your product after delivery; or
• buys a faulty product, knowing that the product was faulty at the time of purchase.

If a customer decides to go with a different option while you are fulfilling a service, you do not have to give them a refund.

Exceptions

Sometimes, the nature of a contract means that customers are entitled to a “cooling-off period” to cancel a contract if they change their mind. You would then have to give them a refund for what they have already paid. These kinds of cases include:

• lay-by sales;
• credit contracts;
• door-to-door sales; and
• unsolicited products or services.

When Do I Have to Give Customers a Refund?

You have to give customers a remedy of some sort when you break one of your consumer guarantees. These consumer guarantees are set out below.

If you do not fulfil one of these consumer guarantees, you have to give your customer a remedy. This would be either a:

• replacement;
• repair; or
• refund.

If the problem with the good or service you provided was minor, then you get to choose what kind of remedy you give. But if it was a serious problem, the customer gets to decide. So if they ask for a refund, in this case, you must provide them with one. 

It is illegal to put a sign up in your business that says “No refunds.”

Your Discretion to Give a Refund

You could operate your business’ refund policy at the legal minimum, only giving refunds to a customer if there was a problem with the product or service you provided. But you have the discretion to tailor your refunds policy to suit your business, as long as you offer this legal minimum.

No matter what you decide, it is a good idea to create a refunds policy, so that customers know what their options are when they buy from you.

Key Takeaways

If a customer changes their mind and wants a refund for a good or service you provided, you can refuse to give them one. But, you cannot refuse to give a customer a remedy if there was a legitimate fault with that product or service. You may also decide to give customers a refund anyway if they change their minds, which can generate customer goodwill. If you would like guidance around your business’ refund policy, contact LegalVision’s regulatory and compliance lawyers on 0800 447 119 or fill out the form on this page.

Frequently Asked Questions