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Ecommerce Forum

Refund Policy
What is your policy on refunds?

WebmasterWorld Senior Member pageoneresults us a WebmasterWorld Top Contributor of All Time 10+ Year Member

Msg#: 2667 posted 1:16 am on Aug 26, 2004 (gmt 0)

I just wanted to share a recent online purchasing experience. I won't get into the details but I will say that it was not a positive one. Everything from the outside and initial research indicated a positive experience. But, once behind the scenes and down to the nitty gritty, things changed.

Anyway, we are now at the refund stage for product/services purchased. After numerous communications over a 2 week period, I get this...

Please allow 2-4 weeks for processing of your refund.

You know, I can understand 48-96 hours at most for processing of a refund, but 2-4 weeks? It took them less than 5 minutes to process my purchase. What gives? ;)

From a consumer standpoint, I don't think this is in the best interest of the company. If you've got a dissatisfied client, issuing an immediate refund is in order. No questions, no ifs, ands, or buts, issue that refund immediately!

In the last 15 years of my career, the one thing I've learned is that you must address any and all problems at once and not put them off or do anything to upset the client. If a consumer is at the point of requesting a refund, then give them their money back ASAP. Don't hold on to it for 2-4 weeks.

Okay, so what are some of your refund policies? And, are they designed to take a negative consumer experience and turn it into a positive one? If so, how?



10+ Year Member

Msg#: 2667 posted 1:49 am on Aug 26, 2004 (gmt 0)

Refunding is a hard issue we have always faced and I would be interested in hearing how others handle it. We sell a custom service that can not be re-packaged and sold again. There is no way for us to recover even a cent of our loss other then to write it off.

Our TOS on the website clearly states the order cannot be canceled and no refunds issued once the order has been processed, but we still find ourselves issuing a lot of refunds just because we don’t want to get a bad name or deal with irate customers. I hate it though…

What we have done is create a “Complaint Resolution Department”. When the customer calls to complain, our customer service rep stays sympathetic and tries to soothe the customer while explaining the policy that they accepted upon placing the order. If that doesn’t satisfy them then the service rep will offer to turn their order over to the “Complaint Resolution Department”. The complaint department then sends the customer a complaint form with a copy of the TOS. The customer has to fill out the form and send it back. We try to put as much distance between the event and the outcome… with the hope that a few days will neutralize their anger and they will just forget about it.

If they go through all the trouble to send back the form, we usually issue a refund unless it is totally bogus.

We issue refunds once a week.

I would like to know how other service industries handle refunds.


WebmasterWorld Senior Member 10+ Year Member

Msg#: 2667 posted 2:39 am on Aug 26, 2004 (gmt 0)

We can't resell our product but the marginal cost is relatively low. We offer a 100% money-back guarantee. Perhaps 2% take advantage of it but I figure a lot more people probably purchase knowing that their satisfaction is guaranteed.


10+ Year Member

Msg#: 2667 posted 7:45 am on Aug 26, 2004 (gmt 0)

pageoneresults, such delays may not be entirely due to the business holding onto the money. As I understand it, processors and banks can take a great deal longer for a refund to trickle through to the customer's account than they take to process the sale in the first place. I think I heard that on this board, in fact, so maybe someone here knows the general timeframe for a refund to be credited to the cardholder...


WebmasterWorld Senior Member 10+ Year Member

Msg#: 2667 posted 8:42 am on Aug 26, 2004 (gmt 0)

You know, I can understand 48-96 hours at most for processing of a refund, but 2-4 weeks? It took them less than 5 minutes to process my purchase. What gives? ;)

Look at the bigger picture for the merchant. Refunds can be a pain for the merchant to log into the account to make one refund, book stock back in, adjust accounts etc... Some merchants (me included) batch them up and do several at once - so that I get them right.

Also, look at someone like WorldPay - it does not take 5 minutes for them to get the money. More in the region of 4 to 5 WEEKS. They ship quickly as a favour to you (and you wouldn't normally order from them if delivery was 5 weeks!).

Now look at WorldPays refund system. Can't find it? Of course you can't. If you refund a customer, it gets taken from the outstanding balance immediately. That's right - if a customer pays through WorldPay $1000 and then wants an immediate refund of $1000, the merchant is actually out of pocket for $1000 for four to five weeks because the refund is processed on the account BEFORE the payment! Now if the merchant was not getting $1000 that week and they process the refund, they actually end up owing money to their card processor!

Holding on to 2 to 4 weeks may simply be that they refund as and when they get your money. Obviously for the customer, this often means that they have to pay for the goods and then wait for their next month statement to benefit from the refund.

Then there are the suppliers. I can send goods (particularly faulty items) back to the supplier and I don't get an immediate refund. One month is becoming more normal now in the trade I am in, but a credit in under two years (yes, I said two years) is still viewed as acceptable.

So for a faulty item an immediate refund of $1000 for my business would mean WorldPay hold on to $1000 for four weeks, during which I have to pay my supplier for that $1000 worth of goods (waiting for credit). A $1000 refund, could mean being $1800 out of pocket for the ecommerce site. Delaying the refund cushions that gap.

... and if the business is small and does not have $1800 to spare, they will find issuing an immediate refund impossible.


WebmasterWorld Senior Member topr8 us a WebmasterWorld Top Contributor of All Time 10+ Year Member

Msg#: 2667 posted 9:48 am on Aug 26, 2004 (gmt 0)

>>Okay, so what are some of your refund policies?

we retail tangible goods, we clearly state on the site (this was a requirement outlined by our card processor) that the customer must inform us within 7 days of receipt of the goods that they require a refund.

(we are not strict on the 7 days but we don't tell them that and try to act reasonably if someone is late)

>>>And, are they designed to take a negative consumer experience and turn it into a positive one? If so, how?

they can contact us easily through a form on the site (which is easy to find) or by replying to the confirmation email that they got when they ordered.

we reply to them with a personal (eg not automated email) within an hour (during open office hours), we don't question their reasons just give them details of how to send the product back, and apologise for the inconvenience and trouble caused, we state at this time that we will refund them the day we receive the items back.

we then do a chargeback the day we get the items back and email the customer to let them know that they have been refunded again with an apology.

we work on the basis that although some people are taking the mickey when they send something back, most people are not and are genuine.


10+ Year Member

Msg#: 2667 posted 4:00 am on Aug 28, 2004 (gmt 0)

As long as the customer sends the product back I always refund, even if I have to throw it away. The community I cater to is fairly small, and I get quite a few new customers from comments on forums about our quick returns/refunds and efforts to make the customer happy. Even when it hurts, I figure I'll lose much more in the long run by having a customer complain that I didn't make them happy.



10+ Year Member

Msg#: 2667 posted 5:53 am on Aug 28, 2004 (gmt 0)

As I understand it, processors and banks can take a great deal longer for a refund to trickle through to the customer's account than they take to process the sale in the first place.

OK, PCInk gave an excellent explanation on why, for some merchants, an immediate refund is bad business.
For those of us that use *great* merchant accounts it is a bit different. If I charge on Monday, I get the money - in my account - on Wednesday. Bam. Just like that. They even deposit on Saturday's.

That said, it is still a pain in the butt to refund people. We have few refunds so it is not an automated process, but I still refund someone within a few days of receiving their return product.

My refund policy is 'no questions asked (just return it new) and a 2 month or 6 month return policy depending on the site.


10+ Year Member

Msg#: 2667 posted 9:48 am on Aug 28, 2004 (gmt 0)

I used to refund everything because I felt bad not doing it.
But I got fed up with requests to refund goods before the person has sent them back (one insisted and that I refund her the postage costs too so she could afford to send it back) but I had to rethink after someone demanded a refund because they had lost their purchase while wearing it!
I get refund demands from people who bought things over a year ago for £1.50, and from people who didn't order the correct size even though our products are generally non-returnable. It seems that virtually no-one reads the T&C even though there is a box you have to tick to say you have looked at it before the order will go through.
Rant over!


WebmasterWorld Senior Member 10+ Year Member

Msg#: 2667 posted 9:58 am on Aug 28, 2004 (gmt 0)

When a refund is warranted it should be, and is, issued as soon as possible. However, we always try to talk to the customer first to see if that really is the last resort. Not e-mail, a telephone call. I won't re-tell the event again, but one of our satisfied customers today started out wanting her money back on her first order!


10+ Year Member

Msg#: 2667 posted 7:15 pm on Aug 28, 2004 (gmt 0)

We sell one of a kind merchandise, and our refund policy is "if you are dissatisfied with it for any reason, send it back to us within 10 days of delivery in arrival condition and we'll issue a prompt refund." In the case of a gift, it's 10 days from receipt of gift. This policy is clearly stated on our website, and can be accessed from the home page.

Our merchant bank requires that a refund be issued within--I think--4 days of the merchandise being returned--so there's no way we could drag out the process for 4 to 5 weeks--if they caught it, we'd get a chargeback.

I realize that the credit card companies (in some cases the companies offering credit card services to emerchants) take 30 to 60 days to process the refund, but requiring 4 to 5 weeks just to process a return seems excessive to me, too.

Actually, we're flexible about the 10 day period, so long as the customer notifies us within about 2 to 3 weeks that they want to return the item, we let them do it.

This may shock some of you, but we refund shipping costs, too. We have a very low return rate (maybe 3 items a year?) and the goodwill generated by refunding the shipping fees (write it off your tax statement as a loss) goes a long way with customers. On our "testimonials," we have one from a rather finicky customer who was so pleased with how we handled the refund that she gave us a testimonial!


10+ Year Member

Msg#: 2667 posted 7:22 pm on Aug 29, 2004 (gmt 0)

We batch all our refunds up on a weekly basis. So, cusotmers could end up waiting as many as 6 days for us to process it.

From there, it is up to the whims of the merchant accounts/credit card company/etc.

If someone calls and needs it quicker, we'll usually oblige, so long as we've gotten the goods back.

The delay is mostly an efficiency issue on our end rather than some weird attempt to collect a fraction of a cent of interest. We have to inspect all returned stock, create new hang tags, re-enter into inventory, dig up the purchase record and issue a refund. Takes time, and easier to do it all at once.


WebmasterWorld Senior Member 10+ Year Member

Msg#: 2667 posted 2:26 am on Aug 30, 2004 (gmt 0)

We do refunds once a week also. And since it sometimes takes 48-72 hours for the issuing bank (for the credit card) to post the transaction, it can take about a week and a half.

This would not be a problem, except their is always a small percentage of people that has nothing to do but monitor their online credit card statements on a nightly basis. Why they can't wait for the statement to show up in the mail, like normal people, I don't understand.

Their is one type of person that never gets a refund.
This is the person that orders the merchandise, pays for it by credit card, and never picks it up. The parcel comes back refused by the post office. We wait for the idiot to phone. If they phone we give them a refund. If they don't phone, they don't get a refund.

Some people must think that we enjoy packing up parcels for fun, to have them returned, and then we have some customers who thing they should get the shipping charge back. They should just be happy that we don't charge a restocking fee.


10+ Year Member

Msg#: 2667 posted 3:56 pm on Aug 30, 2004 (gmt 0)

We issue refunds on returned goods less 8% of the price of the merchandise. No refunds on shipping costs. The 8% retention covers the cc processing charge plus a modest amount to cover the handling of the return. We go out of our way, as most here have demonstrated, to give the customer every possible opportunity to examine the goods online with close up pictures, toll free number to answer any pre-purchase questions and so on. If someone asks our return policy, we explain it clearly and will even calculate out the possible cost to the customer to order and then return. We discourage casual shopping. I do think our policy is a bit rough, but no one has contested it yet. Our per-item cost is quite low, so the 8% retention doesn't really amount to much on a per-sale basis, but it could add up for us.

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