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Tips for SMEs issuing refunds and cancellations due to COVID-19

One of the many predicaments the novel coronavirus and the lockdown of all non-essential business has created for the SME sector regards cancellations and refunds. The prolonged quarantine has seen a number of immediate effects, such as the cancellation of events or the postponement of other ticketed or pre-paid for services. While it may be many small businesses’ goal to reassure their customers during these troubling times, the unpredictable nature of the virus can make it difficult for small businesses to provide customers with answers amid this prolonged period of uncertainty.

That’s why the Australian Competition & Consumer Commission (ACCC) recently released a set of guidelines aimed at helping small businesses navigate these uncharted waters for cancellations and refunds.

It’s essential for businesses to be well-informed when managing refunds and cancellations due to COVID-19. For that reason, the ACCC has issued guidance to empower small-to-medium businesses to understand their rights and obligations to customers and clients under the Australian Consumer Law.

Mick Keogh, ACCC Deputy Chair, said in an ACCC press release, “we know a lot of small businesses are facing a very challenging time, but they still want to do the right thing by their customers”.

“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 guidelines provided by the ACCC highlights the rights and obligations of small businesses relating to issues caused by the unforeseen circumstances of COVID-19, such as the cancellations of functions or events, membership and subscription fees, and the pricing of goods and services.

In the related press release, the ACCC encourages customers to be patient as businesses try their best to deal with requests while many are not in full operation. It also reminds businesses to honour the terms and conditions of their contracts with customers.

“As a business, if you are unable to provide goods or services during this time, you have the opportunity to work with your customers to find a mutually agreeable alternative arrangement,” said Mr Keogh in a press release.

“This could include providing a partial refund, a credit note or voucher, or rescheduling to supply the services at a later date where this is possible.”

Large events, such as weddings, depending on their original dates, have either already been cancelled due to government restrictions on public gatherings or customers are likely to seek information on company policy regarding the possibility of future cancellations, refunds, postponements and other business-to-customer obligations in the coming months. It is the small business’s responsibility to provide customers with answers or alternatives in such circumstances.

“It is important for small business to understand their obligations when handling requests from consumers. Failure by any business to honour its cancellations or refunds policy may constitute misleading conduct under the Australian Consumer Law,” said Mr Keogh.

The ACCC also notes how the organisation’s guidance for consumers may be likewise relevant information for small business. This is because under Australian Consumer Law, in certain circumstances, a small business may be defined as a consumer as well when engaging with other businesses. The ACCC therefore encourages small business to understand both their role as an entity and as a consumer and to learn about their rights and obligations as such.

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