Australia Post will deliver an estimated $2.9 million in compensation to thousands of customers for lost or damaged parcels.

The consumer watchdog has accepted a court-enforceable undertaking from Australia Post and StarTrack to provide compensation for lost or damaged parcels to about 10,500 business contract customers and fewer than 1,000 StarTrack delivery recipients.

Over a four-year span, Australia Post Group failed to accept some compensation requests from business contract customers for lost and damaged items.

It incorrectly told business contract customers they were not eligible for compensation.

Under Australian law, consumers can request a remedy if a product is not of acceptable quality or a service is not performed with due care and skill, fit for purpose or supplied within a reasonable time.

Certain transport services for the purpose of a business were exempted but that was changed in October 2018, guaranteeing the rights applied to the transport of goods to a recipient not carrying out a business linked to the goods.

The Australian Competition and Consumer Commission said Australia Post did not correctly apply the amended exemption, before the company reported the breach in May 2023.