Don’t have a refund policy? You’d better get one…

To refund or not to refund, that is the question.

There is no legal requirement for businesses in B.C., Yukon or the Northwest Territories to offer refunds on goods or services sold. Providing your customers the option to return goods or services that they are not satisfied with very much depends on the products or services you offer. Either way, you should have a policy that clearly outlines whether refunds are accepted or not.

For example, if you sell clothing, you may permit refunds of unworn garments that still have the tags on and are within 14 days of purchase. Whereas with window washing and maintenance services, you're unable to recoup time and money spent on paying employees for the service provided, and therefore the option for a refund might not make sense.

When should I not offer refunds?

If you sell services, rather than goods, you may consider offering a service guarantee rather than a refund opportunity. A service guarantee means that the service is performed to the client's expectations or as outlined in a contract agreement. Therefore, if the completed service does not meet expectations, you will make every reasonable attempt to remedy the situation. A service agreement should be part of your policy, and the customer should be aware of it before purchasing your services.
 If you sell 'big ticket' items, you might also consider not issuing a refund option. Generally, large purchases are made on credit, and when these payments are processed, your merchant services provider will take between 1.5-4% of the total cost of the sale. What you may not know is that to process a refund, they charge that same percentage. For a business owner, the result is merchant services fees for both the sale and reimbursement, as well as, the cost of a sale including employee wages and merchandising costs.  For items of hundreds to thousands of dollars, this can be a pretty significant hit.
Something to consider is that by not offering refunds, there is a higher risk that your customer will take other means to gain satisfaction, such as a chargeback.

What if I don’t have a refund policy?

In BC, Yukon and the Northwest Territories, there is an assumed warranty of 30 days on retail goods; however, technically, this only applies to products that are faulty or are not “as advertised.”  Of late, there has been a trend where a general refund policy of 30 days after the sale is enforced upon businesses who do not have a written refund policy. There’s nothing quite like being strong-armed into accepting tarnished goods from a client when you know they purchased the item in fine-working order.

What should be included my policy and where should I post it?

Be very specific in your policy and clearly outline the circumstances in which a refund offered versus an exchange. For example,  the product has its original tags attached, is unused, or a receipt must be present. As well, be sure to state what timelines are acceptable such as a full refund within 14 days of purchase and exchanges are accepted within 30 days of purchase. Finally, always leave yourself an out, so that final considerations on whether goods are suitable for return/exchange are at the discretion of the company.

Many companies choose to put their return and exchange policy directly on their receipt and encourage employees to highlight this policy with customers at the time of purchase and circle it. If you provide invoices to clients, you will want to include your refund/exchange policy as part of the invoice. The most important place to post this, however, is on the contract itself, which you should go through, point by point with your client.

Great, but I still don’t have one, where can I get it?

Glad you asked! CFIB Business Resources has a template that you can edit for your purposes, ready to rock. Give us a call to get yours today – 1.888.234.2232