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Refund Policy

When your business operates in the digital ecosystem, it is very important to operate within the legal boundaries to avoid any potential issues. And if you’re involved in the e-commerce business, whether it’s an online store, digital software, or a SaaS, a couple of the most basic legal aspects you must address are handing return or exchange requests and processing refunds.

Few customers will maintain a relationship with a brand that isn\"t committed to their satisfaction. And the biggest question many potential buyers have is what you would do if they do not like what they have bought from you? More often than not, the response you have to this question will determine if they buy from you or not.

Statistics have shown that when a product has a clear and buyer-centric return and refund policy, it will sell better than similar options that have no such policy. Return and refund policy is your way of saying - we will only be paid for meeting our customers needs and not merely for existing.

In a majority of counties, there are laws that protect the rights of the consumers. These laws dictate the bare minimum of a refund and return policy that you have to abide by.

A well-written refund policy can boost your sales and increase profits, while an overly restrictive refund policy can scare potential customers away and cost you dearly.

Return and refund policy should typically address the following few points:

Clearly state if returns, exchanges, and refunds are accepted by a company.
The number of days customers have to return or exchange a product.
List any products that may be exempt from returns.
Outline any other requirements that the customer has to meet to be eligible for a refund.
SaaS companies often include information about prorated or partial refunds.
For physical products, it’s a good practice to include some details about shipping charges in the event of a return.
Since refund policy is a legal agreement, it can help an online business in instances when some of the customers claim their rights are not being respected. Let’s see exactly why you need a refund policy on your website.

We have already stated that a refund policy is a legal agreement. If you run an online retail business or an e-commerce website, the chances are that you already have some policies on display for your customers.

While the privacy policy agreement is the only one that is required to be put on display by the law, the terms and conditions agreement and return and refund policies are optional, but highly recommended by legal advisors. Be aware, though, that some countries/states require retail sellers to display a return policy.

If you run an online business where you are directly selling to customers, having a return/refund policy is highly advised. This doesn’t only apply to eCommerce stores and retail stores, but to drop shipping companies and SaaS businesses as well.

Refund policy
In addition to the above, having this document on display has more benefits for the business. If people see a clear return policy for an item, it will be easier for them to make an informed buying decision.

It’s easier to convince someone to make a purchase when they have all of their questions answered, including those regarding refunds.

In fact, if you go and visit help pages on eBay, you will be able to read that this large company requires all stores to have this type of policy because items that come with refund policies tend to sell far better than those without.

A refund policy can also protect your interests by helping you to play it safe on the legal side.

If you have informed the customers about your policy and it respects the minimums defined in the regulations of the business’ origin country, you don\"t have to be afraid of losing a case in court should a customer bring the problem to the court of law.

People don\"t have a tendency to read long and boring legal documents online. On the other hand, you have to provide all the necessary information.

This is why it is advised to break down your return/refund policy into smaller sections. This will increase the readability of the document, make it easier for customers to find what they need, and, at the same time, protect you legally.

Despite what you sell, your refund/return policy should usually contain these three sections:

How many days a customer has to return the product. Does the counting start from the moment they order it, or from when the product gets shipped to them?
If the customer does return a product, you have to specify what kind of refund they are eligible to get. Some stores allow customers to get similar products or get a store credit in the value of the purchased item, while others return the cash spent on the product.
At last, you will have to specify who will pay for the return shipping. Some stores don’t charge customers that are in the same state or country as the business is, while others offer free return shipping regardless of the customer’s location.
If you run a company that sells digital products (downloadable software, SaaS, digital games, etc.) it is advised to provide these two additional sections:

If you allow your customers to get refunds on digital purchases, you have to clearly specify which ones. In case return/refund policies are different for specific products, you will have to specify each one separately.
Sometimes businesses that sell digital products online offer refunds only in certain situations. In this case, you will have to specify each of the situations and provide a short description of each one of them.
If customers can make in-store, online, and over-the-phone purchases, it is advised to specify the refund/return policy for each one of these. You can do this by adding three very short sections to your agreement (policy for in-store, online, and over-the-phone purchase).

As we have already stated, any legal document has to be very clear and easy to read. Try to remember that a return/refund policy should make your customers trust you and feel safe to purchase from you.

You should give your best to make the refund process as simple and as smooth as possible. In other words, avoid things such as too many requirements for a refund, a difficult and unintuitive refund process, and refund processing fees.

Another thing that you should definitely avoid is inconsistency in your policy, simply because it will get people confused. If you have multiple online stores, make sure to have the same refund/return policies on display on each one of them.