Consumer member Ashleigh Brown has won a refund from a mobile phone retailer after she found the new iPhones she bought as gifts were second-hand.

Ashleigh paid $798 for two iPhone 4 8GB phones from retailer Top Mobile’s online store. The phones were bought in December as Christmas presents. Ashleigh bought online as she lives in a small town and couldn’t find the phones at a local store.

After talking to a Top Mobile staff member, Ashleigh went ahead with the purchase on the basis the phones were new. She had also checked what other retailers were charging for the phones to see if Top Mobile’s $399 price for each phone was reasonable. “I looked around and found this to be the current price at most places,” Ashleigh said.

A few months later, one iPhone stopped working. When it was taken to a local repairer, Ashleigh discovered it was a refurbished phone and was told it couldn’t be repaired. Refurbished phones are models previously returned to the manufacturer – either because they were faulty or weren't wanted – and "refreshed" for resale. They’re effectively second-hand.

When Ashleigh got in touch with us about the problem, our consumer adviser Maggie Edwards informed her she had grounds to reject the phones and request a refund under the Consumer Guarantees Act (CGA). “The CGA requires goods to match the description given by the trader. In our view, the phones were effectively being advertised as new models but were second-hand. This should have been made clear and it wasn’t,” Maggie says.

Ashleigh wrote to Top Mobile requesting a refund. The company initially replied that it had never said the phones were “brand new” and described them “as new”.

Maggie recommended Ashleigh take the case to the Disputes Tribunal if Top Mobile refused to provide a refund. The company subsequently agreed to refund Ashleigh the full purchase price.

Top Mobile told us its website now stated whether a phone was refurbished and said it was sorry for what had happened. It said it sells thousands of phones and always tried to do its best for customers.

Legal points

Where goods are sold on the basis of their description, the CGA requires retailers to guarantee that the goods match that description. This guarantee will apply whenever you buy products online. Retailers risk breaching the Fair Trading Act if they represent goods as being new when they’re not.