7th April, 2020

ACCC releases official guidance on refunds and cancellations

Businesses impacted by COVID-19 and subsequent lockdown measures now have updated guidance from the ACCC on how to handle refunds and cancellations.

As a result of the COVID-19 crisis, more small business owners are receiving much needed help from government assistance and financial advisors on how to keep their business moving and maintain their profits.

But there’s also widespread concern regarding what business owners can do without during this time. And if it’s going to leave them out of pocket.

To help small business owners be certain of their rights and obligations when it comes to refunds and cancellations, the Australian Competition & Consumer Commission (ACCC) has released some official guidance to clear the confusion.

What are the biggest questions?

Business owners need clarity around what happens when they need to cancel events or functions, pausing subscription or memberships fees and the ever-changing price of goods and services.

“We know a lot of small businesses are facing a very challenging time, but they still want to do the right thing by their customers,” said ACCC deputy chair Mick Keogh.

“At the same time as handling requests from their own customers, small businesses may also be customers themselves.

“We want to make sure they are aware of their rights when dealing with other businesses”.

For example, if a customer’s booking needs to be cancelled due to government restrictions on public gatherings, the ACCC advise the customer might seek a refund. Businesses are therefore reminded they must uphold the terms and conditions of their contracts with customers.

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What laws do you need to follow as a small business owner?

These changes don’t just affect customers, as business owners also need to be mindful of doing the right thing during this trying time.

They also have obligations under the Australian Consumer Law, which include:

  • to not mislead customers, including about what the customer is entitled to under their terms and conditions
  • to not act unconscionably when dealing with their customers
  • to not seek to rely on unfair terms in standard form contracts with customers.

“It is important for small business to understand their obligations when handling requests from consumers.

“Failure by any business to honour its cancellations or refunds policy may constitute misleading conduct under the Australian Consumer Law,” said Keogh.

Of course, one of the advantages of being a small business owner is the ability to make your own rules during this uncertain time.

You have the opportunity to provide whatever you believe that may ease the pressure on your business via designing your own customer benefits.

It’s something to think about as we all move through this crisis which has no definitive end date.

“As a business, if you are unable to provide goods or services during this time, you have the opportunity to work with your customers to find a mutually agreeable alternative arrangement,” said Keogh.

“This could include providing a partial refund, a credit note or voucher, or rescheduling to supply the services at a later date where this is possible.”

The full details about the ACCC’s guidance for business owners is available on its website.