Luxury athletic apparel company Lululemon Athletica Australia Pty Ltd (Lululemon) found out the hard way that global businesses who apply blanket branding are not above the consumer guarantees made under the Australian Consumer Law.

The background

In July 2017, The Australian Competition & Consumer Commission (ACCC) issued three infringement notices for alleged false or misleading representations regarding consumer rights, resulting in Lululemon having to pay $32,400 in penalties.

The ACCC alleged as follows:

• From 1 May 2017 to 24 May 2017, Lululemon listed sale items on its website under the heading “We Made Too Much”. The website read: “We made a little extra – don’t be shy, help yourself. It’s yours for keeps so no returns and no exchanges.” The ACCC alleged that, by this statement, Lululemon represented that consumers were not entitled to return and obtain a refund for, or exchange, these products under any circumstances.
• Lululemon’s return policy published on its website stated: “Final sale items like underwear, water bottles + We Made Too Much gear are yours for keeps.” The ACCC alleged that, by this statement, Lululemon implied that consumers were not entitled to return or exchange these products under any circumstances.
• In November 2016, a customer contacted Lululemon requesting a refund for products she considered faulty. She received an email from a Lululemon representative saying: “We do not offer refunds for quality affected garments.” The ACCC considered that this statement made it sound as though the consumer was not entitled to a refund if the products were faulty.

Lessons to be learnt

The ACCC made clear that:

• 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.
• Businesses must ensure their refund and returns policy does not breach consumer law, and that representations they make about consumers’ rights to return goods or obtain a refund accurately reflect the consumer guarantee rights under the Australia Consumer Law.

It would appear that some of Lululemon’s return policy wording that formed part of the ACCC’s allegations was incorporated from Lululemon’s overseas return policies. In an increasingly smaller world, it is important that businesses and companies give due consideration and amend their policies and procedures to reflect and incorporate local legislation.

Lululemon has since replaced the wording on its website. It bears noting that the ACCC has the power to, and will, enforce the protections offered by the Australian Consumer Law no matter where your brand originates or how cute your wording.

Please feel free to contact Richard Seneviratne on (07) 3007 3711 or email rseneviratne@mahoneys.com.au for assistance or advice on your rights and obligations under Australian Consumer Law.

Written by Mahoneys

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