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COVID-19: ACCC Releases Guidelines For Small Businesses Managing Refunds And Cancellations

The ACCC has issued guidelines to help small businesses understand their rights and obligations under the Australian Consumer Law, given the mass refunds and cancellations caused by the COVID-19 pandemic.

“In the past couple of weeks we have received over 100 contacts from small businesses about the impact of COVID-19 and their rights and obligations. We have developed this guide to avoid any confusion,” ACCC Deputy Chair Mick Keogh said.

“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.”

The ACCC is encouraging customers to be patient as businesses deal with these requests, as well as suggesting that businesses work together with customers to find a mutually agreeable alternative arrangement, such as a credit voucher or postponing services.

The guidelines cover key issues for retailers, the events industry and those providing subscription services.

If retailers face supply issues and can no longer source products that have been ordered, the ACCC says that in most cases they will be required to provide a full refund. However, if it is a supplier’s fault that a retailer can’t supply the goods, the retailer may be entitled to reimbursement under their contract with the supplier.

Businesses will also be required to honour their contracts with suppliers. For example, if a retailer believes that they will require less stock than they had initially ordered in the second half of the year, they will still need to abide by usual contract obligations.

If a function or event (such as a wedding) is cancelled due to government restrictions, in most cases the customer will not be entitled to a refund. However, a business is still required to honour its terms and conditions that were in place when the customer made the booking, which could entitle a customer to a refund.

The ACCC notes that the customer may also have rights where a contract has not been performed. To remedy this, a business may provide the customer with a partial refund, credit note or voucher, or postpone the service if possible. In this case, the expiration date should allow enough time for the customer to actually use it.

In terms of price gouging, the ACCC states: “As a general rule, you can set your own prices, based on supply and demand.” However, there are some exceptions to this. Excessive pricing on products that are critical to the health and safety of vulnerable consumers is a breach of Australian Consumer Law.

In addition, the federal government has passed a law that prohibits excessive pricing of disposable face masks, disposable gloves, disposable gowns, goggles, alcohol wipes and hand sanitiser.

The full list of ACCC COVID-19 guidelines for small business can be found here. The ACCC has said they will continue to update the information resource.

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