What happens when someone who has bought your online course or program wants a refund? Do you have to provide it? 

With the cost of living increases already taking effect, it is anticipated that requests for refunds for online courses and online programs/training will become more common. With belt tightening comes buyer’s remorse, so if someone requests a refund for your course, you need to know what you can and cannot say and do. 

In this article:

• We’ll dig into the private course industry, that is, any person or business who offers any online course, training or program that is not a Registered Training Organisation (although this applies to them too). 

• In a straightforward summary I’ll explain what the Australian Consumer Law (ACL) says about refunds specifically for courses, training or programs delivered in part or in entirety, online; and

• We’ll also cover what will put some muscle behind you for when people ask for a refund, and when you MUST provide a refund.

Before we get into exploring refunds, we need to start by looking at the law that applies to you, something a lot of people don’t give much thought to in the excitement of launching.

Australian Consumer Law and your online course refund policy

The Australian Consumer Law (ACL) applies to all retailers of goods and services in Australia. The private provision of online courses is largely unregulated, other than the broad imprint of the ACL. It is not possible to get around this law, no matter how good the terms and conditions of your purchase agreement are. But you can ensure you protect yourself around this framework.

The ACL provides two main areas of protection for anyone who buys online courses, training or programs in Australia as follows:

1. Protection around consumer guarantees (that what you offer must be fit for purpose and where a consumer guarantee is breached the product or service is to be repaired, replaced or refunded); and

2. Protection against misleading and deceptive conduct.

The Federal Court has confirmed that consumers who buy digital products online have the same rights as they would if they made the purchase at a physical store. 

Now, let’s look at a brief summary of misleading and deceptive conduct before we explore consumer guarantees with more depth.

Protection against misleading and deceptive conduct

As an online course or program provider, you cannot make false or misleading statements about:

• The nature, suitability, or quality of your course, program or training;

• Price;

• Availability (e.g. scarcity selling); or

• Your identity, qualifications, or experience.

The use of the word ‘free’ must also be used very carefully. For example, if you have made an ‘extra’ available as a bonus or for free, but increased the price of the initial offering, this could be considered misleading and deceptive conduct.

As an example, think about the way some people advertise their program - they quote the price and then set out the inclusions, some noted as “free”, some with a higher value attributed to them to show what a bargain it really is to buy the course. Done haphazardly, this could be construed as misleading and deceptive conduct.

ACL consumer guarantees

Your online course or program may be considered a product and/or a service - depending how you deliver the content. If it is a packaged pre-recorded digital course it may be considered a product. If it has a live coaching or group meeting element, it may be considered a mix of product and service.

Under the ACL, digital products must:

• match the description made by you

• be fit for purpose;

• not carry hidden debts or extra charges; and

• meet any extra promises about performance, condition and quality (including lifetime guarantees and money back offers);

Further, under the ACL digital services must:

• be provided with acceptable care and skill or technical knowledge, taking all necessary steps to avoid loss and damage; and

• be delivered within a reasonable time when there is no agreed end date.

Now that we have looked at what the law says about products and services, where is the line that would mean a refund MUST be paid out by you to someone who has purchased your course of program?

When you have an obligation to refund 

By law, an online course or program provider only needs to provide a refund if there is a major problem. 

A major problem may include circumstances where:

• the provider cannot deliver the course 

• the course is faulty, or 

• the course is significantly different from its description (particularly important if you had pre-sold training and hadn’t finalised the content or the content was very different. For example, say you sold a course about creating instagram reels but when it was delivered it was about creating LinkedIn profile refreshes).

A major problem does NOT include:

• a failure to update a course created some time ago;

• a change of mind;

• choosing the wrong course where the student had a few to choose from;

• change in circumstances (including financial hardship); or

• unwillingness or inability to comply with the requirements of a course (including a lack of time to complete the course or program)

So, you do not always need to be prepared to give refunds to your customers. You do, however, need to have your online program or online course policy clear and as part of some robust terms and conditions, to ensure that all your customers understand the circumstances under which you are willing to provide refunds. This should be available to your customers at the time of purchase so they can understand the finality of them committing to purchase your course or program

Offer limited access periods or free trials? Consider this.

Sometimes online course or training creators offer 7 or 14-day free access periods to incentivise people to join their courses or programs. If you do this, you must also ensure that it is as easy for them to cancel their subscription, as it is to sign up for it.

If it is found that you have allowed payments to come out despite someone trying to cancel a free trial period the Australian Competition and Consumer Commission (ACCC) can prosecute and has done so in the past. 

In 2021 the Shaw Academy (an Irish company that sold to an Australian audience) was made to refund 450 consumers approximately $50,000 after an investigation by the ACCC found that they continued to charge some consumers a fee after they tried to cancel at the end of a free trial.

It only takes one complaint to be at risk of an investigation by the ACCC. They do not only focus on big business so you’ll want to ensure you’re covered effectively from a user experience perspective and ensure the opt-out process and the integration to the payment processor you use (Stripe, Paypal etc) allows that to happen without issue.

Can I say ‘no refunds’?

You cannot state anywhere broadly that there are ‘no refunds’ or that purchase is ‘non-refundable’, because Australian Consumer Law always allows for refunds for major problems, as explored above. You can however state that there is ‘no refund for change of mind’ or no refund for any of the other reasons listed above that are not considered a ‘major problem’. However, you must choose those words carefully.

This was seen in 2020, when Sony was found by the ACCC to have engaged in misleading and deceptive conduct within their online entertainment service for stating that funds were “non-refundable”. While Sony was fined $3.5 million for this statement, and that might seem appropriate for a business of that size, it’s all relative. Even if you aren’t faced with a fine, having to challenge it or deal with client complaints incurs legal fees and of course there is the interruption to business and drain on your time to deal with these matters that you also want to avoid.

Protection for online course and program creators

So while you may well have your own refund or returns online course policy, often there are elements that are omitted or would be more effective if they are tailored to meet the specific way in which you deliver your online course or program. And of course, it must also be easy to read and understand so there can be no doubt as to whether it was sufficiently easy for any regular consumer to understand.

Protecting yourself and your online course or program 

Importantly, it is best for any refund policy to be part of a more comprehensive terms and conditions which covers everything from payment, refunds, limiting your liability with disclaimers and more. If you are ever faced with a complaint and you don’t have a robust set of terms and conditions in place, it is always harder to manage.

While there may be only a very small percentage of your customers/clients that ever demand a refund from you, or make a complaint about you, experience tells us that these are often the people that will make your life hell. Ensuring your refund policy is clear and adequate (because it is tailored to the specific way in which you deliver your online course, training or program), is essential. People can be unreasonable and if you’ve ever experienced that in other ways as a business owner, you’ll know that going through this process takes time and energy and creates significant stress and disruption to your life and business.

Related Articles: Seller Beware: Online course or program owner protection

Protecting Your Online Course & Online Membership Business Models

Terms and Conditions for Online Courses made in Australia - The Top 5 things you must include

5 Questions To Ask Yourself Before Launching Your Mastermind, Online Training or Coaching Program

The art of getting paid: How to recover unpaid invoices

If you are unsure your terms and conditions are sufficient to protect your course or program, take a look at either our online course terms and conditions template or our online program terms and conditions template. If you would like a customised version, get in touch with Emma for a free initial consultation by clicking here.