It is not novel where consumers or customer entering a shop whereby a no refund policy is

being applied. When this is being applied full force, a customer is not allowed to refund their
goods bought even if it comes with defects. In this short discussion, we will be delving into
whether such policies are applicable in the laws of Malaysia.

The general rule that is being applied in Malaysia is that such policies may exist provided the
two main conditions are being satisfied. If such conditions are not being fulfilled, customers
have the right to return the product and ask for a refund. These first condition is being
expounded in the case of Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2
MLJ 441 in which the apex court stipulated that the seller must first inform the customers of
the existence of such a policy before a purchase is being made. Therefore, if a receipt which
is being issued after a purchase is made states of such no refund policy, such a policy is
clearly not valid at the first instance.

The second condition can be found under section 32 of the Consumer Protection Act 1999
(hereinafter refereed to as ‘CPA’) whereby the product that is sold has to be of an acceptable
quality.

Even if the two conditions are being satisfied, the court also has the discretion to strike out
any terms in a contract that is unfair. Such powers by the court are being derived from
section 24A to 24I of the CPA. However, the court will generally only exercise such a
discretion when there is an express contract for purchase of big ticket items like electrical
appliances. This can be seen in the case of Su Tiang Joo v Tribunal for Consumer Claims
[2021] 1 MLJ 411 in which the appellant sought to refund the replaces blowers as the
authorized dealer refused to reimburse him the money for the repairs done even when the
repaired period is under warranty. The court allowed the appeal and held that the appellant
has the locus standi to bring this action to the tribunal since the goods are protected under the
CPA 1999 and that this case was merely a simple refund for repairs done within the warranty
period.

Sarah Cole, ‘Virtual Friend Fires Employee’ (Naked Law, 1 May 2009) accessed 19 November 2009

At this juncture, it is also best to differentiate a contract from a future services contract. For a
future services contract like gym membership or facial treatments that is continuing, a no
refund policy is an illegal one as stated under section 17 of the CPA, This means that a
consumer is entitled for a refund for any of the unused portion of a package despite a refund
policy being in place.
In conclusion, a responsible buyer should apply the above two conditions in mind whenever
making a purchase at a store with a no refund policy being held in place. If one applies the
two conditions and is satisfied that one of it is not being fulfilled, one can then pick up the
courage and let the seller know that the policy is illegal. Alternatively, one can also put in a
complaint to the Tribunal of Consumer Claims. In my opinion, this policy may serve to be
useful when facing with customers who deliberately destroy goods after purchasing them,
who then return to the store to ask for a refund. This fraudulent act might be avoided with the
policy being in place. However, sellers should not go overboard as to infringe the rights of a
consumer. It all comes to the fact that even if a customer is asking for a refund, it does not
mean they are entitled to it.

References

Statutes
1. Consumer Protection Act 1999, s 32
2. Consumer Protection Act 1999, s 17

Cases

1. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441
2. Su Tiang Joo v Tribunal for Consumer Claims [2021] 1 MLJ 411

Websites

1. Kenneth Koh, ‘ Goods Sold Are Not Returnable or Refundable?’ (NKPT, 22 March
2022) <https://www.nkpt.com.my/2022/03/22/goods-sold-are-not-returnable-or-
refundable/> accessed 25 January 2023
2. Donovan & Ho, ;A package you can’t refuse: Do You know your consumer rights?’
(D&H, 6 July 2015)< https://dnh.com.my/a-package-you-cant-refuse-do-you-know-your-
consumer-rights/> accessed 25 January 2023