Refunds in a COVID world

The opening up of NSW and Victoria has been a cause for joy and celebration. However, at ABIC we acknowledge that it also brings fresh challenges for our industry and operating a small business. We’re here to work through and navigate these challenges with you.

Recently, we have had a surge of enquiries regarding business obligations when it comes to refunding unvaccinated clients for gift vouchers or pre-paid treatment packages, and we have put together some valuable resources and links to help you navigate your way through these client requests.

Are gift cards refundable?

Generally speaking, gift cards are considered non-refundable for cash, however it is also important to outline your terms upon purchase. Details around the rules of issuing Gift Cards should be carefully observed and can be found here - Rules for gift cards | ACCC

What about a pre-paid treatment packages?

It will depend on the terms upon which the business sold the service.

What are my rights in a circumstance where the client is not able to take advantage of the services provided due to vaccination status? 

Again, it will depend on the terms upon which the business sold the service.

What if I did not have a contract or terms in place?

On the ACCC Consumer rights and obligations relating to COVID it states:

1. If cancellation occurs due to government restrictions, it is unlikely the customer will be entitled to a refund under the Consumer guarantee provisions of the Australian Consumer Law.
2. A business is still required to honour its existing terms and conditions, including in respect to cancellation and change policies. The relevant terms and conditions are those in effect at the time your customer made their booking, i.e., you cannot retrospectively change these.
3. The customer may also have rights under contract law where the contract has not been performed.
4. You may agree to another remedy with the customer, such as providing a partial refund, a credit note or voucher, or postponing the services until a later date if possible.
5. If you provide a credit note or voucher, it should have an expiration date which is long enough to allow your customer to use the credit note or voucher.

Should I extend the expiry on the gift card or pre-paid treatment?

As this is a very grey area, there are no specific rights or wrongs, and most situations would require independent legal advice to make them as close to black and white as possible. Reaching a mutually beneficial agreement would be ideal, such as allowing the client to redeem products in-lieu of the services purchased, or to extend the validity of the gift card to date where they could redeem (i.e., Anticipated changes to NSW rules around servicing unvaccinated clients in December).

I am in Victoria; what if I don’t know when unvaccinated clients will be able to return?

You need to consider if retaining the amount is protecting legitimate business interests. If you have completed a consultation, and commenced a treatment plan for a client, that is very different to simply issuing a gift voucher for a client with little knowledge or understanding on how it will be redeemed.

ACCC states:

In many circumstances, a term allowing a business to retain the full deposit or payment without having delivered any goods or services may be considered unfair under the unfair contract terms provisions of Australian Consumer Law, as it may not be reasonably necessary to retain the full amount to protect legitimate business interests. However, this is unlikely to be the case if you are covering costs you have incurred.

The best outcome would be to reach a mutually beneficial arrangement with your client.

So, what should I do if my client refuses to reach an agreement?

If you cannot reach a reasonable agreement and outcome with your client, it may be best to contact ACCC and/or seek independent legal advice.

ACCC Rules for gift cards - Rules for gift cards | ACCC

ACCC information for small business during COVID - COVID-19 (coronavirus) information for business | ACCC

ACCC Consumers’ rights and obligations - Consumers' rights & obligations | ACCC