Refund Policy (New Zealand)

A Refund Policy in New Zealand sets the organisation's rules and expectations on refunds and the responsibilities of staff and users, supporting compliance with the Companies Act 1993.

New Zealand has some of the strongest consumer protection laws in the world. The Consumer Guarantees Act 1993 implies non-excludable consumer guarantees into every contract for the supply of goods or services to a consumer. For goods, the CGA guarantees include acceptable quality (s 6), fitness for particular purpose (s 8), correspondence with description (s 9), correspondence with sample (s 10), and title (s 12). For services, the CGA guarantees include reasonable care and skill (s 28), fitness for purpose (s 29), completion within a reasonable time (s 30), and reasonable price where no price is agreed (s 31). These guarantees apply automatically and cannot be excluded in consumer transactions.

The CGA makes an important distinction between a failure of substantial character and a minor failure. For a failure of substantial character — broadly, where the goods or services are so deficient that a reasonable consumer would not have acquired them had they known — the consumer has the right to choose their remedy, including a full refund by way of rejecting the goods (s 18). For a minor failure — where the goods or services can be fixed relatively easily — the supplier has the right to choose the remedy (repair, replace, or refund), provided they do so within a reasonable time. This is sometimes referred to as the 'repair-replace-refund hierarchy.' If the supplier does not remedy the failure within a reasonable time, the consumer may obtain an independent remedy and recover its reasonable cost.

The Fair Trading Act 1986 prohibits misleading and deceptive conduct in trade. Any business that displays a 'no refunds' sign, includes a 'no refund' clause in its contracts, or otherwise misrepresents consumers' statutory rights under the CGA commits a breach of the FTA and may face enforcement action by the Commerce Commission. A well-drafted Refund Policy must be consistent with the CGA and must not mislead consumers about their rights.

Every New Zealand business that sells goods or services to consumers needs a Refund Policy. The policy should be accessible to customers before they make a purchase — published on your website, included in your Terms of Sale, or provided with your invoices or receipts.

For e-commerce businesses, Consumer Protection NZ (part of the Ministry of Business, Innovation and Employment) expects that refund and returns information be accessible before the customer completes a purchase. Online retailers must confirm that their refund policy does not mislead consumers about their statutory rights under the Consumer Guarantees Act 1993. The Commerce Commission, which enforces the Fair Trading Act 1986, actively investigates businesses that make misleading statements about refund rights.

For bricks-and-mortar retailers, the Commerce Commission's guidelines make clear that displaying a 'no refunds' sign is unlawful if it suggests that consumers have no right to a refund in any circumstances. While retailers are not required to accept change-of-mind returns, they must provide remedies for goods that fail to comply with a consumer guarantee.

For service businesses, the CGA consumer guarantees (sections 28-31) also apply. A Refund Policy for services should explain the remedy framework as it applies to services, including the consumer's right to cancel a service contract and receive a refund where there is a failure of substantial character, or to require re-supply or a price reduction for a minor failure.

For B2B businesses, note that the consumer guarantees under the CGA apply only to 'consumer' transactions — that is, where the buyer acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use. Section 43 of the CGA permits B2B parties to contract out of the consumer guarantees in writing where it is fair and reasonable to do so. A well-drafted B2B contract may include a contracting-out clause under s 43, but a Refund Policy directed at consumers must not attempt to rely on such a clause.

A compliant New Zealand Refund Policy must include several key elements that reflect the CGA's consumer guarantee framework.

The consumer guarantee statement is the most important element. Your Refund Policy must accurately state the consumer's rights under the Consumer Guarantees Act 1993, including the guarantees implied for goods (ss 6-12) and services (ss 28-31), and must not misrepresent or limit those rights. The policy must not include any statement that would mislead consumers about their rights under the Fair Trading Act 1986.

The failure of substantial character and minor failure distinction is essential for explaining the CGA's remedy hierarchy. Where a failure is of substantial character (s 21), the consumer chooses the remedy — rejection and refund, replacement, or compensation. Where a failure is minor, the supplier may choose the remedy (repair, replace, or refund), provided it is done within a reasonable time.

The change-of-mind returns clause must clearly distinguish your discretionary policy from your mandatory CGA obligations. It must be clear that any conditions you impose on change-of-mind returns (time limits, packaging requirements, customer-paid return shipping) apply only to change-of-mind situations and do not limit the consumer's statutory CGA rights for faulty or non-conforming goods or services.

The return shipping clause must state that the supplier is responsible for return shipping costs where goods are being returned due to a CGA consumer guarantee failure. Customer-paid return shipping is only permissible for discretionary change-of-mind returns.

The complaints and escalation clause should direct dissatisfied consumers to the Disputes Tribunal (for claims up to NZD $30,000), Consumer Protection NZ (www.consumerprotection.govt.nz), and the Commerce Commission (www.comcom.govt.nz) for complaints about misleading conduct. This demonstrates transparency and compliance with the CGA and FTA.

The governing law clause should specify the laws of New Zealand, including the Consumer Guarantees Act 1993, the Fair Trading Act 1986, and the Contract and Commercial Law Act 2017.

The digital goods and services clause has become increasingly important for New Zealand e-commerce businesses. Digital downloads, software licences, and streaming services are not automatically excluded from the CGA — if they are supplied to a consumer, the guarantees of reasonable care and skill (Section 28 CGA) and fitness for purpose (Section 29 CGA) apply to the supply. A well-drafted Refund Policy should address how the business handles refunds for digital goods that do not meet a consumer guarantee, while clearly distinguishing this from any discretionary policy on change-of-mind cancellations for digital content.

The policy update clause should note that the Refund Policy may be updated from time to time to reflect changes in the Consumer Guarantees Act 1993, enforcement guidance from the Commerce Commission, or changes in business practice. Consumers should be directed to the current version on the business's website.

Under New Zealand law, Section 9 of the Fair Trading Act 1986 prohibits misleading conduct in trade, Section 21 of the Consumer Guarantees Act 1993 defines a failure of substantial character, and Section 43 of the Consumer Guarantees Act 1993 permits business-to-business contracting out where fair and reasonable. Regulatory oversight falls under the Commerce Commission (www.comcom.govt.nz) for Fair Trading Act enforcement and Consumer Protection NZ (part of the Ministry of Business, Innovation and Employment) for consumer rights guidance. Disputes between consumers and businesses are resolved by the Disputes Tribunal (Disputes Tribunal Act 1988) for claims up to NZD $30,000, or the District Court of New Zealand for larger claims. The forms-legal.com Refund Policy (New Zealand) provides a ready-to-use template that meets all applicable New Zealand legal requirements.