“No Refund” terms & conditions result in $750,000 fine, injunctions and costs orders.

If your terms and conditions expressly or impliedly exclude refund remedies under the Australian Consumer Law, you might be in for a nasty shock.

In a recent case, the Australian Federal Court imposed, by consent, fines of $750,000, injunctions and costs orders (totaling a further $50,000) on MSY Group Pty Ltd, MSY Technology Pty Ltd and M.S.Y. Technology (NSW) Pty Ltd for publishing, including on the companies’ website, business terms and conditions that impliedly excluded remedies available under the Australian Consumer Law (ACL).

As a result, the Court declared that the respondents:

  • “engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL;
  • “made false or misleading representations in relation to the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s. 29(1)(m) of the ACL; and
  • ” made false or misleading representations in relation to a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(n) of the ACL.

What is especially important about this case is that the Court held that a contravention of these ACL provisions could occur, where MSY’s terms of business and representations:

… impliedly represented to consumers that their rights were limited when that was not the case.

…were silent in response to the consumer’s reference to their specific ACL rights and impliedly represented that MSY … was not required to provide an ACL remedy to consumers.

(My underlining).

The decision creates a risk for businesses that insert additional or alternative “remedies” – such as candidate replacement “guarantees” or indemnities – into their terms of business (or who answer questions raised by consumers about their remedies for defective services) and say nothing about the availability of the ACL remedies in circumstances where the ACL remedies apply.

The ACCC has been active, recently, in challenging unfair terms and conduct that may be in breach of the ACL. If it’s been a while since you last had your terms of business reviewed, you might do well to have your lawyers review them for you against the background of recent developments in this area.

And if your customer-facing staff are not familiar with the ACL remedies, it might be worth investing in some training.

It could be a lot less expensive than the $800,000 in fines and costs ordered in this case!

Andrew C. Wood

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