Major vs minor failure: Australian consumer guarantees

A customer writes that their order has a problem. You have to decide, quickly, what you owe them. Do you repair it, replace it, refund it, or politely decline? The answer turns on one question that sounds technical and is actually practical: is this a major failure or a minor one?

Major vs minor failure is the line the Australian consumer guarantees draw between a customer who gets to choose their remedy and a customer who gets a free repair. Get it right and you resolve most faults cheaply and fairly. Get it wrong and you either overpay, or you refuse a remedy the law says you owe, which is exactly how a small fault becomes a bank dispute. This guide explains the test in plain words, gives you a repeatable way to classify a problem, and shows the dollar difference each outcome makes.

This guide is for you if:

A customer says an item is faulty, damaged or not as described, and you need to decide what to offer.
You want a consistent rule so different staff give the same answer.
You have lost or settled a dispute over a fault and want to know whether you classified it correctly.

Last updated: 9 October 2026. Written by the ChargeFix team. Reviewed against sources on 9 October 2026.

The 30-second answer (TL;DR)

When a consumer guarantee fails, the ACCC says you must offer a repair, replacement or refund, and you cannot send the customer to the manufacturer.
With a major failure, the customer chooses a refund or a replacement. There is no deduction for use, and the refund goes to the original payment method. The customer may instead keep the item and receive compensation.
With a minor failure, you must repair it free. A refund or replacement is not required, though you may offer one.
If you do not fix a minor problem within a reasonable time, the customer can have it fixed elsewhere and claim the cost, take a refund or replacement, or keep the item with compensation.
A problem is major if the item is unsafe, significantly different from its description or sample, has a serious fault (or several smaller faults that would have stopped a buyer purchasing), or cannot be used for its purpose and cannot be fixed quickly.
Change of mind is not a failure. It is not covered by the guarantees.
When unsure, treat a borderline case as major. A refund is cheaper than a dispute.

Quick note: The test asks about the buyer, not about you. Would a reasonable buyer who knew about the problem have bought the item? If the answer is no, it is probably major. If they would have bought it and wanted a free fix, it is probably minor.

Major vs minor failure at a glance

	Major failure	Minor failure
Who chooses the remedy?	The customer: refund or replacement	You: repair free
Refund required?	Yes, if the customer chooses it	No, though you may offer one
Deduction for use?	No	Not applicable
Refund goes to	The original payment method	Not applicable
Can the customer keep the item?	Yes, with compensation	Yes, with compensation if you fail to fix it in a reasonable time
If you do nothing	The customer can still claim a remedy	The customer can have it fixed elsewhere and claim the cost

What is a major failure?

The ACCC's repair, replace, refund, cancel page lists four situations that make a problem major. A problem is major if:

The item is unsafe.
It is significantly different from its description or sample.
It has a serious fault, or several smaller faults that together would have stopped a buyer purchasing it.
It cannot be used for its purpose and cannot be fixed quickly.

Each one is a way of saying the same thing: this is not a small imperfection, it is a problem that goes to whether the customer got what they paid for.

What does "unsafe" cover?

Anything that could cause harm in normal use. A heater that overheats, a cot with a loose rail, a charger that sparks. If safety is in doubt, treat it as major and stop supplying the item until you know. Our rule for staff is that anything unsafe is escalated the same day.

What does "significantly different from description or sample" cover?

An item that is not what the customer was told they were buying. A listing says solid timber and the item is veneer. A photo shows a leather bag and the bag is vinyl. A size chart says 100 centimetres and the item is 80. The test is "significantly", so a small shade difference in a photo probably does not count, while a different material or a missing component probably does.

Your product page is therefore your first line of defence and your first source of exposure. Accurate descriptions protect you. Overstated ones create major failures.

What does "serious fault or several smaller faults" cover?

A single serious fault, such as a motor that fails after a week, is enough. So is a collection of small problems that, taken together, would have put a reasonable buyer off. One scratch is minor. A scratch, a loose hinge, a misaligned lid and a faulty switch on the same item may add up to major.

What does "cannot be used for its purpose and cannot be fixed quickly" cover?

A problem that stops the item doing its job, where a quick repair is not available. A phone that does not charge, where a repair would take weeks. If it can be fixed quickly and cheaply, it is more likely minor. If the customer needs the item to work now and you cannot make that happen, it leans major.

What is a minor failure?

A minor failure is any failure that is not major. In practice it is a fault that can be put right without defeating the point of the purchase. The ACCC says you must repair it free of charge. You do not have to offer a refund or replacement, though you may.

What if the repair does not happen?

The page says that if you fail to fix a minor problem within a reasonable time, the customer can:

have it fixed elsewhere and claim the cost from you
take a refund or a replacement
keep the item and receive compensation

"Reasonable time" is not defined in the part of the page we read, so judge it from the product and the customer's need. A week to repair a toaster may be reasonable. Six weeks probably is not. If you are slow, a minor failure can turn into a refund anyway, with an annoyed customer attached.

Why does major vs minor failure matter for chargebacks?

Most fault disputes are not really about the fault. They are about what happened after the customer reported it. A customer who is offered a prompt, fair remedy rarely calls their bank. A customer who is told "no refund" for an unsafe or badly misdescribed item often does, and the ACCC's guidance sits on their side.

That is why major vs minor failure is a dispute-prevention tool as much as a legal test. Every dispute counts toward your chargeback rate, and Shopify says a high rate can lead to an account health notice, a reserve or enrolment in its NDRP programme. The dispute fee in Australia is A$25, and the full cost of a lost dispute is the order value, the fee and your time. Classifying correctly and acting early removes most of that exposure.

There is a second reason. The classification tells you what to say. If you think a problem is major, your first message should offer the customer a choice of refund or replacement. If you think it is minor, your first message should offer a repair and a date. Customers read that difference immediately, and a message that matches the law reads as fair.

What does repair replace refund mean in practice?

The ACCC frames the remedies as repair, replace, refund, and the order in which they apply depends on the classification. Here is how each works for an online store.

Repair. You fix the fault at no cost to the customer. For a minor failure this is your default remedy. Decide up front who will do the repair, how the customer sends the item, and how long it should take. If you cannot repair it, the situation changes and you should move to a replacement or refund.

Replace. You send a working equivalent. For a major failure the customer may choose this. Check you have stock before you offer it, because promising a replacement you cannot supply creates a second complaint.

Refund. You return the money to the original payment method. On a major failure the ACCC says there is no deduction for use. On Shopify, issue the refund before a dispute is filed. Shopify says a full refund ends an inquiry, a partial refund does not, and an open chargeback cannot be refunded.

A simple rule: whichever remedy you owe, offer it in the first reply, in writing, with a date.

Think of the repair replace refund sequence as a ladder rather than a menu. On a minor problem you start at the bottom rung, repair, and climb only if the repair fails or takes too long. On a major problem the customer can step straight to replace or refund. Writing your repair replace refund steps into your internal guide, and into the policy page the customer reads, means nobody has to improvise under pressure. The ACCC page on repair replace refund is the plain-language reference, so link to it in your staff notes and check it for updates.

It also helps to know what a major problem is not. A major problem is not simply an expensive item or an angry customer. It is a problem that meets one of the four tests. Equally, a minor problem is not one you can ignore. If a minor problem is left unrepaired it can turn into a refund, and a major problem handled badly can turn into a dispute.

How do you classify a problem in five minutes?

Use these questions in order. Stop at the first "yes".

Is it unsafe? If yes, major. Stop supplying and escalate.
Is it significantly different from what the customer was told or shown? If yes, major.
Is it a serious fault, or are there several faults that together would have put a buyer off? If yes, major.
Can the item not be used for its purpose, and can it not be fixed quickly? If yes, major.
None of the above? Probably minor. Offer a free repair, and set a date.
Is the customer saying they just don't want it? That is change of mind, not a failure.

Write the answer and the reason on the order. A one-line note such as "Major: unsafe heating element, customer chose refund" is gold if the case is ever disputed.

A worked example set (illustrations, not legal advice)

These are made-up cases to show the reasoning. Each real case turns on its own facts.

Situation	Likely classification	Reason
Kettle overheats and trips the safety switch	Major	Unsafe
Bag listed as leather, supplied in vinyl	Major	Significantly different from description
Loose button on a new shirt	Minor	Quick, cheap repair, item still usable
Laptop does not power on a week after delivery	Major	Cannot be used for its purpose, not a quick fix
One scuffed corner on a box, item works	Minor, or not a fault	Cosmetic, item usable
Table arrives with a wobbly leg, a chipped top and a misaligned drawer	Possibly major	Several smaller faults that together might have stopped a buyer purchasing
Dress is the right item but the customer dislikes the colour in person	Not a failure	Change of mind

What remedies follow from each classification?

Major failure: the customer chooses

The ACCC says the customer chooses between a refund and a replacement. If they choose a refund, it goes to the original payment method and there is no deduction for use. If they prefer to keep the item, they can receive compensation instead.

Practical points:

Do not argue the choice. The customer, not you, decides between refund and replacement for a major failure.
Do not deduct for use, even if the item has been used for weeks.
Refund to the original payment method. Do not insist on store credit.
Reimburse reasonable return costs if a fault is confirmed, and pay collection for bulky items.

Minor failure: you decide how to fix it

You must repair free. You may offer a replacement or refund if that is quicker or cheaper. You cannot send the customer to the manufacturer.

Practical points:

Say how long the repair will take, and give a date.
Offer a loan or replacement if the item is essential.
Reimburse reasonable return costs for a confirmed fault.
Watch the clock. A slow repair can convert the problem into a refund.

What if no fault is found?

The ACCC says that if no fault is found, you may charge collection and inspection costs, with a reasonable estimate given in advance. State this in your policy so it is not a surprise.

What does each outcome cost you?

Classification is also a money decision. Here is a simple model. The figures are assumed.

Illustration: a A$200 item with a fault

Cost of goods A$100. Return postage A$12. Repair cost A$40. Dispute fee A$25. Your time on a dispute response is 45 minutes at A$40 an hour, so A$30.

Path	Cost to you
Major, refund, goods returned and resold at A$60	A$200 refunded, minus A$60 resale = A$140, plus A$12 postage = A$152
Major, replacement	A$100 cost of goods, plus A$12 postage = A$112
Minor, repair	A$40 repair, plus A$12 postage = A$52
Wrongly refused, customer disputes and wins	A$200 + A$25 fee + A$30 time = A$255, and you may not recover the item

The last row is the expensive mistake. A refused remedy that the law says you owe is the most costly outcome in the table, and it also leaves a dispute on your record. If you are unsure whether a fault is major or minor, offering the customer a refund or replacement is cheaper than losing a dispute.

How does this fit with accepting or fighting?

If a customer disputes after you refused a remedy for a major failure, the ACCC's guidance supports their position. Our guide to accepting or fighting a Shopify dispute explains why settling is usually the right call. If it is still an inquiry, a full refund ends it. If it is an open chargeback, Shopify says you cannot refund it, so you respond with evidence or accept.

How should you talk to the customer about it?

Your wording shapes whether this stays between you and the customer.

When you think it's major

Hi [name], I'm sorry about the problem with your order. From what you've described, this is the kind of fault where you can choose between a replacement and a full refund to your original payment method. Which would you prefer? We'll cover the return postage. Please send a photo of the fault so we can record it.

When you think it's minor

Hi [name], thanks for letting us know. We'll repair the [item] at no cost to you and cover the postage. We expect to have it back to you by [date]. If that doesn't suit you, tell us and we'll talk about other options.

When you aren't sure

Hi [name], thanks for the details. We'd like to put this right. Could you send a photo or short video of the problem? Once we have that, we'll offer a remedy within one business day.

None of these use the words "no refund". They ask for evidence and promise a decision. Shopify's prevention guidance says to reply quickly, and a prompt, fair reply is what stops most disputes.

How would you classify real-world cases?

These are illustrations of reasoning, not legal advice. Each uses the four tests and the buyer question: would a reasonable buyer who knew about the problem still have bought it?

Case	Likely classification	Why
A kettle arrives with a cracked base that leaks	Major	Cannot be used for its purpose and is arguably unsafe
A shirt has a loose button	Minor	Quick, cheap repair; the buyer would still have bought it
A listing says "100% cotton" and the item is polyester	Major	Significantly different from the description
A blender works but the lid is slightly scuffed	Minor	Cosmetic; use is unaffected
A bag has a scratch, a loose strap and a stiff zip	Possibly major	Several smaller faults that together might put a buyer off
A phone does not charge and repair would take weeks	Likely major	Cannot be used for its purpose and cannot be fixed quickly
A customer simply dislikes the colour they ordered	Not a failure	Change of mind, outside the guarantees

Where a case sits between two rows, use the more generous reading and record why. The point of the exercise is consistency: two staff members facing the same fault should reach the same answer.

How do you train a team on major vs minor failure?

A short routine beats a long manual. Give support staff a one-page card with the four major tests, the buyer question and the three outcomes. Add three rules:

Classify on the first reply. Do not ask for ten photos before you decide what you owe. Ask for what you need, then commit.
Escalate anything unsafe the same day, and stop selling the item until it is checked.
Write the classification on the order. One line, dated, with the reason.

Review a sample of closed cases each month. If a classification was wrong, update the card. Over a quarter you will see which product lines generate genuine faults and which generate change-of-mind returns, and you can fix the description, the photography or the supplier accordingly.

How does this connect to your refund policy?

Your policy should reflect the major and minor split without using the jargon. Our guide to writing a refund policy for a Shopify store has a template that separates faults from change of mind. A blanket line that denies refunds contradicts the guarantees, which we explain in the post on whether you can say "no refunds" in Australia.

What evidence helps when a dispute is about a fault?

Shopify's chargeback reasons page suggests, for product unacceptable, fulfilment details, tracking, product descriptions and photos, and proof the customer did not try to return the item or that a replacement was sent. It suggests, for credit not processed, refund and return policies, proof the customer was informed, emails, and proof of an earlier refund.

For a fault dispute, assemble:

The product page as it stood at the time of sale, with a dated screenshot.
Photos of the item as packed, if you keep them.
The customer's report and any photo they sent.
Your reply and the remedy offered, with dates.
Proof of the remedy, such as a replacement shipment or a refund record.
Your policy, dated.

Files must be PDF, JPEG or PNG, up to 2 MB each and 4 MB in total, with one file per evidence type, and no links. See the chargeback evidence checklist. The due date is usually 7 to 21 days after filing.

If you offered a remedy and the customer ignored it, say so. If you refused a remedy you owed, do not hide it. Decide whether to fight on the facts, or to settle.

What's different for Australian merchants?

The guarantees are national law. They apply to goods sold in Australia, and the ACCC page is the plain-language reference.

You cannot contract out of them. The ACCC says "no refund" signs and terms do not override consumer rights, and relying on them for faulty goods is illegal.

Manufacturers have a role, not an exclusive one. The ACCC page mentions that manufacturers can reimburse businesses, but says you cannot send the customer to the manufacturer. Pursue the manufacturer yourself.

Customers have other routes. Consumer Affairs Victoria says customers can go to AFCA if their bank rejects a chargeback request, and CHOICE reports that a retailer can end up refunding through a chargeback even if it first refused.

Long cardholder windows. NAB gives cardholders up to 120 days for Visa and Mastercard disputes, varying by reason, and 210 days for eftpos. A fault found late can still become a dispute.

Dates and money. Use A$ and full dates when you record a classification, such as "classified major on 12 October 2026".

What does a consistent consumer guarantees process look like?

Put the pieces together and the process is short. The customer reports a problem. You acknowledge it within a day and ask only for what you need. You classify it using the tests. You offer the remedy that matches, in writing, with a date. You record the decision. If the customer is still unhappy, you have a trail that shows a fair process.

That trail matters because the consumer guarantees are about outcomes, but disputes are decided on records. A card issuer reading your response sees dates, messages and a remedy. Shopify says it submits your evidence to the issuer, and the issuer decides within up to 75 days of submission. We could not verify how an issuer weighs a classification, so do not rely on it as a trump card. It is simply better to have a documented, reasonable process than none.

Common mistakes

Treating every fault as minor

You refuse a refund the customer is entitled to, and the dispute follows.

Treating every complaint as major

You overpay for cosmetic issues and change-of-mind returns dressed as faults.

Deducting for use on a major failure

The ACCC page says no deduction applies.

Sending the customer to the manufacturer

The ACCC says you cannot.

Repairing too slowly

A minor failure not fixed in a reasonable time gives the customer other options.

Forgetting to record the classification

A one-line note on the order is cheap and valuable.

Confusing change of mind with a fault

Change of mind is outside the guarantees. If you offer a policy, honour it. If you do not, you can decline, politely.

What we could not verify

A definition of "reasonable time" for repairs. The page we read does not give one.
How these rules apply to particular product categories, such as digital goods or services.
State or territory differences, and any non-ACCC sources on how courts have read the tests.
How a card issuer weighs a major or minor classification in a dispute.
Any detail beyond the ACCC page of 21 July 2026.

Where a decision depends on one of these, ask a lawyer or the ACCC and keep the reply.

Frequently asked questions

What is the difference between a major and minor failure?

For a major failure, the customer chooses between a refund and a replacement. For a minor failure, you must repair it free of charge, and a refund or replacement is not required. A failure is major if the item is unsafe, significantly different from its description, seriously faulty, or cannot be used for its purpose and cannot be fixed quickly.

Who decides whether it is major or minor?

In the first instance, you do, based on the tests. If the customer disagrees, they can go to their bank, the ACCC or a consumer body. Because a wrong refusal is expensive, treat borderline cases as major, record your reasoning on the order, and offer a remedy promptly.

Can I deduct for use on a major failure?

No. The ACCC says there is no deduction for use on a major problem, so you cannot subtract an amount for the time the customer had the item, and the refund goes to the original payment method. The customer may also choose to keep the item and receive compensation instead of a refund.

What if I cannot fix a minor problem in a reasonable time?

The customer can have it fixed elsewhere and claim the cost from you, take a refund or a replacement, or keep the item with compensation. The page does not define reasonable time, so judge it by the product and the customer's need, and say how long you expect.

Is a colour that looks different on screen a major failure?

Usually not, unless the difference is significant compared with the description or sample. A small shade variation is more likely a minor issue or a change of mind. Photograph accurately, say how colours may vary, and treat a big difference, such as a different material, as major.

Does change of mind count as a failure?

No. The ACCC says change of mind is not covered by the consumer guarantees. If you offer a change-of-mind policy you must honour it, but you can set the window and conditions. Keep this separate from faults in your policy.

Do I have to pay for the customer's return postage?

If a fault is confirmed, the ACCC says you must reimburse reasonable return costs, and pay collection for bulky items. If no fault is found, you may charge collection and inspection costs with a reasonable estimate given in advance, so state that in your policy.

Can the customer keep the item and get compensation?

Yes, for a major problem, and for a minor problem that is not fixed in a reasonable time. The customer can choose to keep the item and receive compensation rather than a refund or replacement. The page does not set an amount in the part we read.

What if the customer disputes with their bank after I refused?

If it is an inquiry, a full refund ends it. If it is an open chargeback, you cannot refund it, so you respond or accept. When the fault is major and you refused a remedy, the ACCC's guidance supports the customer, so settling is usually cheaper.

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