Lululemon pinged for refusing refunds on lemons


Posted By on 26/07/17 at 4:32 PM

Upmarket activewear brand, Lululemon Athletica Australia Pty Ltd (Lululemon), has caught the attention of the ACCC over its policy on refunds and exchanges.

What happened?

In May 2017, Lululemon’s returns policy (as published on its website) stated that no refunds or exchanges would be accepted on final sale items such as water bottles and underwear, and other items promoted as “We Made Too Much” (namely, excess stock which is given away for free). The ACCC alleged this wording suggested that Lululemon would not provide a refund or exchange for these items under any circumstances.

Further, the ACCC alleged that in November 2016 a customer contacted Lululemon seeking a refund for faulty items. The customer was told that Lululemon “does not offer refunds for quality affected garments”.

Why is this wrong?

The ACL contains cast iron consumer guarantees with which manufacturers and retailers must comply. This includes that goods are of reasonable quality. If a customer purchases athletic gear which is not of reasonable quality, then under the Australian Consumer Law that customer is entitled to a replacement, refund or repair, even if the gear was purchased on sale.

In stating that no refunds or exchanges would be offered for faulty goods, Lululemon has likely breached the consumer guarantees.

Said ACCC Commissioner Sarah Court, “If a product or service fails to meet a consumer guarantee, people are automatically entitled to a remedy under the Australian Consumer Law. If products develop a fault which constitutes a major failure, customers are entitled to a refund, even if the product was purchased on sale.”

The outcome

Lululemon paid infringement notices totalling $32,400 in relation to this conduct.

The ACCC will issue an infringement notice when it has reasonable grounds to believe a contravention of the ACL has taken place. Paying an infringement notice is not an admission of guilt.

Don’t let this happen to you

Manufacturers and retailers must ensure that their refund policies are compliant with the consumer guarantees set out in the ACL, or risk receiving attention from the ACCC.

If you’re not sure whether your customer terms (including refund and exchange policies) are up to scratch, contact us for an obligation free chat.

Naomi Stephens Paralegal

Naomi is a paralegal in the Competition Law & Regulatory Compliance team, focusing on marketing activations, advertising review and trade promotions compliance.  She joined KHQ after having spent... Read More