As an artist and online retailer, you already know that returns happen a lot. But did you know that 67% of shoppers check the returns page before making a purchase?

So, if you don’t have one, you’re taking a hit. Posting a well-written return policy can help your business retain customers, increase sales, build trust, and protect your bottom line. 

The Basics

What Is a Return Policy?

A return policy outlines how, when, and under what conditions your customers can return purchased goods and services. 

What Is a Refund Policy?

A refund policy outlines the rules for getting refunds for purchased goods and services. It often details the eligibility requirements for refunds, types of refunds given, the refund timeframe, and the return process.

Is There a Difference Between a Return Policy and Refund Policy?

Returns and refunds are technically two separate occurrences. 

A return policy indicates rules and conditions about if, when, and for how long your customers can return a purchase and receive reimbursement. It includes information about how long your customer has to make the return and which items are included or excluded from the policy. 

A refund policy states if and when your customers are entitled to receive reimbursement for a purchase and do not have to be contingent on a return. For example, if a customer received a faulty or damaged item or the order never arrives, your refund policy should stipulate if, when, and how the customer is entitled to receive a refund.

What About Exchange Policies?

You also have the option to set up an exchange policy with your customers. Exchange policies outline if your customer can request store credit, a replacement item, or a new item of the same or lesser value instead of a refund. 

Who Needs a Return Policy?

Anyone directly selling goods or services to consumers online or in person needs a return policy. Your competitors, no doubt, already offer refunds, returns, and exchanges. This is a common practice, and customers will probably choose a competitor with a good return policy over your business if you don’t provide one.

Embedding a comprehensive return policy with refund and exchange clauses on your website helps protect your business from fraudulent returns and increases trust between you and your consumers.

Are You Legally Required to Have a Return Policy?

While you are not legally required to have a return policy, laws and regulations about a customer’s right to a refund do exist in certain situations around the world. For example, if you sell to consumers in the UK or throughout Europe, refunds are legally required if an item is faulty, not as described, or does not perform as promised. On the other hand, Australia, the US, and Canada do not require businesses to provide returns on any goods. 

However, some US states have regulations in place mandating that you post a conspicuous policy if you intend to refuse refunds. These states include: California, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Minnesota, New Jersey, New York, Ohio, Rhode Island, Utah, and Virginia.

If you do not post a policy stating otherwise, the consumer is entitled to a refund within various time limits and with proof of purchase. State laws change often, so consider looking into the regional consumer protection laws that might impact how your business handles a return policy.

Are Return Policies Legally Binding?

Return policies are legally binding in some parts of the world, and this might affect what you can and cannot put in your policy. For example, under European Union (EU) rules, you must repair, replace, reduce the price of, or give a refund to consumers if the purchased item is faulty or does not work as advertised. You also have to give consumers at least a 2-year guarantee at no cost to them, even if you only sell products online. In some EU countries, the warranty is even longer.

The EU also requires you to give consumers a 14-day cooling off period after a purchase is made. In other words, your consumers have the right to return a purchase for any reason within 14 days for a full refund. 

If you work in the UK, you also have to give consumers a 14-day cooling off period similar to the EU regulations. In the UK, if your customer accepts an item but later finds that it’s faulty, they’re within their rights to ask you to repair or replace it. In the UK, your customers have up to 6 years to make a claim on items they’ve bought from you. 

In accordance with EU and UK laws, you must abide by these return policy regulations if you do business in either location.

Benefits of Return Policies

Return Policies May Safeguard Your Business from Legal Backlash

In the US, the Federal Trade Commission (FTC) and individual state governments control the laws regulating store policies. If you don’t post your own policy, your business would be required to give refunds, and customers could possibly pursue legal action against you if you refused.

Return Policies Increase Customer Satisfaction

A good return policy increases customer satisfaction because they feel less risk when purchasing something from your company. For example, new customers are more likely to make a purchase if your return policy allows them to get a full refund if they’re unsatisfied with the goods or service, driving up your sales.

It also establishes trust and transparency between your business and customers, leading to higher customer retention and limiting your risk of receiving fraudulent returns.

Return Policies Protect Your Business from Complaints

A thorough return and refund policy also protects your company against highly dissatisfied customers or individuals who might respond with anger. While only a small percentage of customers react in an uncomfortable or volatile way, referring directly to your return policy helps you or your customer service team de-escalate, neutralize, and minimize negative encounters.

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What Your Return Policy Should Include

Your return and refund policy should outline every procedure you plan to implement concerning product exchanges, returns, refunds, and warranties. The following are the most common clauses you’ll find in a standard return policy.

How to Return Items

Inform potential customers in the first clauses of the policy if you do or do not accept returned items. If you do accept returns, let your customers know how to properly complete one. Clearly state if the item needs to be unopened, in original packaging, with tags, and any other guidelines.

Refund Information

You should include information in your return policy about your refund protocols. Tell customers if they get full, partial, or no refunds on items they want to send back. You should also mention if you offer store credit as a refund option. 

Exchange Information

You should tell customers if they can exchange items and, if so, under what conditions. For example, you might offer clothing exchanges if someone needs a different size than what they originally ordered. You should also let your customer know if you only accept items for exchanges that still have tags, are in their original packaging, or have any other exchange conditions.

Stipulations, Exclusions, and Warranties

Depending on the goods and services you sell, you might have stipulations, exclusions, or offer warranties on your items. You’ll want to outline any stipulation for processes like refunding damaged goods or replacing incorrect items.

Be sure to mention geographical stipulations, like if your business operates in different regions and uses separate return policies based on customer location. You might sell goods that are excluded from returns, so let your customers know if certain items are non-refundable, like swimwear or perishable items.

If you offer warranties on any products, clearly outline the warranty guidelines and consider including a warranty disclaimer. 

Timeline

Let customers know how much time they have to request and follow through on a refund, return, or exchange. You should also include information about how long it will take for them to receive the refund or their exchanged item. 

Shipping and Restocking Fees

Add a clause stating whether the customer or company is responsible for shipping and handling costs. Similarly, if you charge a restocking fee, include it in the policy. 

International Sales

If you sell to an international market, returns can get complicated. Familiarize yourself with regional laws in the areas where you do business, like the UK, where returns are legally mandated.

Other things to consider if you work internationally are shipping times and costs. For example, it may be easier for your business and the customer to provide a refund without receiving the item if shipping times to or from certain regions are prolonged.

Returns for Digital Products

For business owners selling digital products, you’ll want to establish a process for customer support if a download link is faulty. You should also state if you allow refunds on digital purchases.

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Where to Display Your Return Policy

You should display your return policy somewhere noticeable so new and returning customers can easily find it. It’s in your best interest to post your return policy in multiple locations.

Website Footer

The most common place for ecommerce stores to publish their return policy is in the footer of their website, so consumers can access it at any time while navigating through the site.

During the Checkout Process

You might also want to display your return policy somewhere during the checkout process before a customer finalizes the sale, allowing them to read the procedure beforehand. If needed, you can also point to the link if someone complains or tries to claim they could not find it. 

In Other Legal Policies

Consider also including a link to your return policy within your website terms and conditions. Your refund policy is a condition of your services that users should be aware of if they want to purchase something from you, so it makes sense to include it here.

In Your Emails to Customers

Include a link to your return policy in the footer of any emails you send to customers, especially if it’s a confirmation of purchase or shipment tracking email. Not only is this convenient for your consumers, but it also ensures they have knowledge about the return and refund protocols your company follows.

Other Considerations

Make Your Return and Refund Policy Easy to Read

You want your return policy to be easy to read. Avoid long paragraphs and unnecessary legalese, so your customers understand your company’s policies. It also makes it easier on yourself whenever you need to reference the return policy in the future.

Consider Avoiding a “No Refund” Policy

You can legally offer a “no refund” policy or a very similar “all sales are final” policy. But many businesses with these strict policies lose customers to competitors with more lenient return options. “No refund” stipulations significantly impact online retailers because customers buy products sight unseen, which makes the risk of purchase higher.

Customers may also leave negative reviews about your policy or react angrily to your customer service department. You might instead offer at least store credit, which could help you retain and appease a few of those customers.

Benefits of a Money-Back Guarantee Policy

A money-back guarantee incentivizes customers to complete the sale, especially if you’re an online retailer or sell digital products. If you offer a no-questions-asked, full refund policy, it might set you apart from your competitors. It also builds trust between you and the customer and minimizes the risk new customers might feel when purchasing from you for the first time.

Do Not Copy Someone Else’s Return Policy

No matter what, do not copy another business’s return policy. Not only is this plagiarizing, but you won’t know all facets of the policy. It’s easy to create a comprehensive policy for your business using a refund policy template, many of which are free online. Once completed, it’s best to have your local lawyer review the policy to make sure that you have covered all of your bases.

Conclusion

If you sell products to consumers, your business should create a return policy that covers refunds and exchanges. A well-written return policy helps set your customers’ expectations, protects your company from liabilities, and resolves many customer service inquiries. 

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