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It is very important to operate within the legal boundaries to avoid any potential issues, when your business operates in the digital ecosystem.
If you’re involved in the ecommerce business, whether it is an online store, digital software or a SaaS (Software as a Service ), a couple of the most basic legal aspects you must address are handing return or exchange requests and processing refunds.
In a most of the countries, 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 products.
- List any products that may be exempt from returns.
- Outline any other requirements that customer has to meet to get eligible for a refund.
- SaaS companies often include information about prorated or partial refunds.
For physical products, it is 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.
WHY IT IS NECESSARY TO MENTION REFUND POLICY IN YOUR WEBSITE ?
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. 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 for drop shipping companies and SaaS businesses as well.
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 is 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 refund.
Refund policy can also protect your interests by helping you to play it safe on the legal side.
If you have made known 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.
CONTENTS OF REFUND POLICY
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 also protect you legally.
Refund/return policy should usually contain these three sections:
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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?
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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.
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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 your company sells digital products (downloadable software, SaaS, digital games, etc.) it is advised to provide these two additional sections:
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If you allow your customers to get refunds on digital purchases, you have to clearly specify on which ones. In case return/refund policies are different for specific products, you will have to specify each one separately.
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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 to 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).
SAMPLE OF REFUND POLICY
Sample free refund policy template for digital products
Generic refund policy
Thanks for purchasing our products (or subscribing to our services) at [website] operated by [name].
We offer a full money-back guarantee for all purchases made on our website. If you are not satisfied with the product that you have purchased from us, you can get your money back no questions asked. You are eligible for a full reimbursement within 14 calendar days of your purchase.
After the 14-day period, you will no longer be eligible and won't be able to receive a refund. We encourage our customers to try the product (or service) in the first two weeks after their purchase to ensure it fits your needs.
If you have any additional questions or would like to request a refund, feel free to contact us.
Sample free refund policy template for physical products
Generic refund policy
Thanks for purchasing our products at [website] operated by [name].
In order to be eligible for a refund, you have to return the product within 30 calendar days of your purchase. The product must be in the same condition that you receive it and undamaged in any way.
After we receive your item, our team of professionals will inspect it and process your refund. The money will be refunded to the original payment method you’ve used during the purchase. For credit card payments it may take 5 to 10 business days for a refund to show up on your credit card statement.
If the product is damaged in any way, or you have initiated the return after 30 calendar days have passed, you will not be eligible for a refund.
If anything is unclear or you have more questions feel free to contact our customer support team.
Sample free refund policy template for perishable products
Generic refund policy
Thanks for purchasing our products at [website] operated by [name].
Due to the nature of our business and products we sell, items that expire sooner than 1 month from the date of the purchase are not eligible for a refund.
For any other items to be eligible for a refund, you have to return the item you have purchased to us within 7 calendar days of the purchase. The item must unopened and in its original condition. Contact our customer services department to get a free shipping label.
If our products arrived damaged, rotten or contaminated in any way, please contact us right away and we will be happy to send a free replacement regardless of its expiration date.
