No Refunds Allowed

15 years ago

My initial thoughts... money back guarantees promote chargebacks & increase your refund rates...

Physical products are in a different world compared to digital products... but...

I understand the warm fuzzy feeling that customers get when they get a 60day money back guarantee... but it advocates your customers to refund your product and get it for free...

If you are promoting a 'digital product' I would highly suggest NOT offering a money back guarantee... because simply this will make people think they can purchase, download, then refund their purchase...

it's a global phenomenon that consumers are no doubt taking advantage of...

Protect your own products, don't offer any money back guarantees on digital products of your own, unless you don't need the money for your products... because people would rather pay nothing than something...

- Jared

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Johnny Slater

15 years ago

Finally, a voice of reason. All too often people take the short sighted view saying that offering a refund policy increases sales. In some cases this may be true, but there are cases where it only brings out the buy it, refund, and now I got it for free crowd.

Originally Posted by webdesignhq

My initial thoughts... money back guarantees promote chargebacks & increase your refund rates...

Physical products are in a different world compared to digital products... but...

I understand the warm fuzzy feeling that customers get when they get a 60day money back guarantee... but it advocates your customers to refund your product and get it for free...

If you are promoting a 'digital product' I would highly suggest NOT offering a money back guarantee... because simply this will make people think they can purchase, download, then refund their purchase...

it's a global phenomenon that consumers are no doubt taking advantage of...

Protect your own products, don't offer any money back guarantees on digital products of your own, unless you don't need the money for your products... because people would rather pay nothing than something...

- Jared

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lakshaybehl

15 years ago

Originally Posted by Johnny Slater

Finally, a voice of reason. All too often people take the short sighted view saying that offering a refund policy increases sales. In some cases this may be true, but there are cases where it only brings out the buy it, refund, and now I got it for free crowd.

Absolutely.

But I feel another way to do this would be doing products that are not downloadable... Like streaming videos.

That way you can offer a MBG and still protect your products.

-Lakshay

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Jared Alberghini

15 years ago

Originally Posted by Johnny Slater

Finally, a voice of reason. All too often people take the short sighted view saying that offering a refund policy increases sales. In some cases this may be true, but there are cases where it only brings out the buy it, refund, and now I got it for free crowd.

Hallelujah Johnny...

I'm so glad someone backs my thinking up...

In most cases, offering a refund is just a marketing technique, not a genuine money back guarantee... which most software/digital providers DO NOT OFFER because it's a DIGITAL PRODUCT...

and there's no way to tell if the product is not just going to be shared, compared to a physical product, where you have a tracking id, and you have proof and know the product was delivered...

This is why most DIGITAL DOWNLOADS are not covered by any sort of money back guarantee...

it's two totally different worlds, the physical products compared to the digital products... and if I were you, don't give refunds to your digital products, that can't be secured.

- Jared

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Lance K

15 years ago

If your product brings out that crowd, then it's likely crap. If it's not crap you will appeal to enough honest folks. A money back guarantee will make you enough extra sales that you'll be money ahead even if a few of the scum bags slip through the cracks and pull one over on ya. Most of the time.

Really though, if someone wants to be sure when it comes to their own products, the only way to do so is to test it both ways.

Originally Posted by Johnny Slater

Finally, a voice of reason. All too often people take the short sighted view saying that offering a refund policy increases sales. In some cases this may be true, but there are cases where it only brings out the buy it, refund, and now I got it for free crowd.

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MaskedMarketer

15 years ago

Originally Posted by alfredlee

Yes, digital products shouldn't be requested for refunds. I think we should put something like 'Once downloaded, considered sold' or something similar on the sales page to prevent digital product thefts.

Another kind of product that is not applicable to refunds are Personalized Products. When a merchandise is carved with someone else name, it doesn't make sense to accept return as you probably can't resell it anymore.

Why are you afraid of refunds?

Originally Posted by Lance K

If your product brings out that crowd, then it's likely crap. If it's not crap you will appeal to enough honest folks. A money back guarantee will make you enough extra sales that you'll be money ahead even if a few of the scum bags slip through the cracks and pull one over on ya. Most of the time.

Really though, if someone wants to be sure when it comes to their own products, the only way to do so is to test it both ways.

Lance,

Thats exactly right- glad you brought that up..

There are 2 different types of people out there...

1.Your customers

2.The freebie guys

If you're not offering a refund you're hurting yourself. This is ALMOST the same as direct mail- and it is the same in a psychological sense.

If you're in it to make a quick buck- I could see why one would want to not offer a refund or if the product is trash (that would be considered a scam )

Why should you're loyal customers be penilized because of the freebie guys?

Don't let your emotions get in the way of business guys- offering a refund is proven to work in direct sales/marketing.

Instead of not offering a refund, improve the product, customer service, salesletter, price, whatever it takes- but don't remove that refund- because it shows that YOU LACK CONFIDENCE- to the customer...

Note: While refunds work the majority of the time- the underlying rule with anything in business is, TEST. But if a refund fails to bring in more business- its probably something other than your refund policy that you need to work on.

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Ian.Canaway

15 years ago

Check the laws where you live before following any of the 'advice' or 'ideas' given in this thread (including me).

In the UK all internet purchases (minus a few exceptions) are governed by the Distance Selling Regulations. I'm not sure if the US has something similar.

The main provisions of the Regulations are that:

• Consumers must be given clear information about the goods or services before buying;

• Goods must be delivered within thirty days unless agreed otherwise;

• Consumers have a cooling off period in which they can withdraw from the contract for any reason. The cooling off period begins as soon as the order has been made. In the case of goods, it ends seven working days after the day of receipt of the goods. In the case of services, it ends seven working days after the day the order were made. If the consumer agrees to the service beginning within the seven days, the right to cancel ends when the service starts; and

• Where consumers notify the supplier in writing or another durable medium that they wish to cancel the contract, they must be refunded within 30 days all money paid.

Further reading here:

Distance Selling (Mail Order, Telephone and Internet Shopping) Quick Facts - BERR
The UK's Distance Selling Regulations | OUT-LAW.COM

Just something to keep in mind if you are based in the UK.

Ian

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Chris Lockwood

15 years ago

Originally Posted by webdesignhq

My initial thoughts... money back guarantees promote chargebacks & increase your refund rates...

Well, of course there will be more refunds if you offer them, just like KFC sells more buckets of chicken than McDonald's does, since McDonald's doesn't sell buckets of chicken.

The real question is how does offering guarantees affect your overall profit?

How does offering a guarantee promote chargebacks? It should be just the opposite: the chargebacks are more likely when people can't just ask for a refund.

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Johnny Slater

15 years ago

Chris, more and more people lately seem to go directly to the chargeback and never even ask for a refund.

Having a refund policy or not probably has no impact on the amount of chargebacks you recieve, but thinking that offering refunds will automatically reduce chargebacks for everyone is a false assumption.

Not all products are created equal and not all customers are created equal either. As has been stated several times everyone should do their own testing with their own products and see what works best for them.

Just because I have less chargebacks and less refunds because I offer only a conditional refund policy does not automatically mean that it would work the same way for everyone.

Honestly, through my own testing, I have found that when I had a unconditional 30 day no questions asked refund policy I had twice as many people ask for refunds as I do now. However, someone else may end up with twice as many instead if they tried the same policy that I am using.

Another consideration is when I ran my last WSO and sold SMP for only $65... my refund rate went through the roof. The product was the same as what other people were paying $300 for and the customers paying the higher price were satisfied with what they bought. The customers paying only $65 percieved the vaule as much less and almost every refund request went directly through PayPal and only 1 of them even bothered to contact me before going directly to PayPal to request a refund. Because of the huge hike in refund requests I will not be offering such a huge discount on that product ever again. It's just not worth the headache.

There are countless conditions that could cause refunds and the refund policy is only one of them. It all comes down to testing. Never accept what anyone else says as the only or even the best way to do anything. You will never know the best practices for running your own business by following others. You must test everything and find what works for you personally.

Originally Posted by Chris Lockwood

Well, of course there will be more refunds if you offer them, just like KFC sells more buckets of chicken than McDonald's does, since McDonald's doesn't sell buckets of chicken.

The real question is how does offering guarantees affect your overall profit?

How does offering a guarantee promote chargebacks? It should be just the opposite: the chargebacks are more likely when people can't just ask for a refund.

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Chris Lockwood

15 years ago

Originally Posted by Johnny Slater

Chris, more and more people lately seem to go directly to the chargeback and never even ask for a refund.

Having a refund policy or not probably has no impact on the amount of chargebacks you recieve, but thinking that offering refunds will automatically reduce chargebacks for everyone is a false assumption.

I know some people chargeback regardless of there being a moneyback guarantee, since I run a business.

I find it hard to believe that every single one of those chargebacks would have happened if there was a clearly stated refund policy. I know I would never do a chargeback if the merchant issued me a refund, and that's true of many people. It's basic logic and common sense. It's easier to say "I'd like a refund" than contact the CC company and try to convince them it was an unauthorized purchase or there is some other reason why they should grant the chargeback... since contrary to what some people seem to think, they do not issue a chargeback every time the customer calls!

I find it even harder to believe that having a moneyback guarantee would INCREASE the number of chargebacks (which is what I responded to) - still waiting for someone to explain that one.

If you really believe that, I wonder why you even have an opinion about stating a guarantee or not, since you seem to think everyone who wants their money back will just do the chargeback, regardless of your policy.

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globalpro

15 years ago

I don't offer refunds, but do offer replacement of the product.

Like it's been said, too many 'refund' happy people out there.

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John

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onera

15 years ago

I also think money back guarantee for digital product is not a winner proposition for the seller. They are more refunder to upset your profit

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GarrieWilson

15 years ago

Originally Posted by John Derrick

As a customer, I love shopping on Newegg.com. I have spent many thousands of dollars on computer parts from them.

As a marketer, I have to wonder about this new trend.

Today I ordered three things:

1) a digital camera for my wife
2) a new 1 Terabyte hard drive
3) Two sticks of 1GB RAM for my PC

During the checkout process I noticed that under each of the products it says "Limited Non-Refundable 30-Day Return Policy"

I thought that the law required all vendors to provide a 30 day refund policy?

I know that when it is software, there are loopholes that let vendors off the hook on refunds.... but this is all hardware.

How do they avoid chargebacks?

Anyone have any ideas on this?

John,

It seems everyone to your reply/questions and went a different direction about refunds.

To answer your question, as a general rule you do not have to offer a refund IF your policy is clearly stated. This of course, depends on the laws that govern your land.

As far as NewEgg, they are getting pricey. I've been usig price grabber recently and saved over $500 on my htpc build. I do use NewEgg for research and buy if they are cheaper but I really dislike their policy on damaged items. ie They wont cross ship.

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John Derrick

15 years ago

Well... I can see some people feel pretty strongly about money back guarantees.

When it comes to a physical product that is sold sight unseen, how is the customer supposed to know if the product works as advertised?

Ever see an informerical on TV NOT offer a money back guarantee?
Of course getting one is a different story completely.

BUT....

When you are selling information, I have always thought it very strange to offer a money back guarantee, because once the customer has the information, you can not take it back.

BUT, when you use click bank you have no choice or control over this policy.

ALSO, when you accept paypal I believe you have to offer money back also.

With the wide spread media coverage claiming that the economic "sky is falling", people are going to be much more tight with their money and this may increase the amount of refunds across the board.

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John Derrick

15 years ago

GarrieWilson,

You are correct... this took a turn away from the original point

As for newegg, I didn't know that they do not cross ship for everyone? They always do for me, probably because I used to be a systems builder and I would spend $50,000 a month with them in the past.... So I do all my returns/cross ships through a rep.

Now that I am no longer a systems builder I may find my level of service lowered, but I have not had any issues to cause me to find out.

Most of the time I still find their prices very good.

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BIG Mike

Banned 15 years ago

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MaskedMarketer

15 years ago

Originally Posted by BIG Mike

@John:

In my experience, there are no absolutes - you need to test which policy converts better. Forget about what people "Say" because without testing a given product to a given market under a given policy, you cannot be certain of the best way to go.

The other consideration is who you're using for a payment processor. Selling through CB? I don't think you have a choice. Selling through PayPal? Basically the same thing. And offering refunds or not, chargebacks will always be a small problem no matter what you do.

That said, we offer a 60 day refund period, simply because in our market (Scripts and Software), it works best for us. Yeah, we get our share of refunders, but then again, they don't get our products for free because we disable the licenses. We have the luxury of not worrying about it one way or another.

I know refunds aggravate everyone, but realistically, how high is the average refund rate IM-wide? I'm guessing it's not very high - if it were, IM would not be so popular in the first place. For anyone who has a really high refund rate - I'm guessing it's the product or service more so than anything else.

Thats right only testing will tell as this is all speculation. Every marketer is in a different industry with a different product with different quality and a different way of selling it.

Not offering a money back guarantee can show lack of confidence in the product. Lack of confidence= lack of sales.

If you just use a digital product as a front end product, then who cares if they refund? Why get bent out of shape? The money is never made on the front end... and if you don't have a backend to compensate, then you have a bigger business problem then worrying about a refund issues...

If your back end is digital- then make it psychical and/or digital so its harder to return. Who cares if someone returns a 17-97$ product?

Its just part of the game!!!

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radhika

15 years ago

Originally Posted by BIG Mike

That said, we offer a 60 day refund period, simply because in our market (Scripts and Software), it works best for us. Yeah, we get our share of refunders, but then again, they don't get our products for free because we disable the licenses. We have the luxury of not worrying about it one way or another.

There is no wrong in refunding the money if the software/script/a download (example the ebook will not open up or giving error etc) actually doesn't work for the buyer.

But like all others said, there are always a set of people that are trying to get the product and ask refund with in few hours. This is a big blow to info product sellers.

Once I saw an ebook authorizing tool on buyers computer. The ebook will open on buyers computer only and he can not pass it on ... the license will be disabled. But the problem was buyer gets to connect to internet for license checking. Not sure this site is still around. Actually it is a membership site where ebooks can be stored by vendors to protect them.

.

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GarrieWilson

15 years ago

As far as I know, businesses, at least in the US, are not required by law to give refunds unless they clearly state they do. That may vary from state-to-state, but I've seen stores offer no refunds ("All Sales Are Final"), exchanges, in-store credits, partial refunds with re-stocking fees and so forth.

It's the opposite. You are required to give a cash refund for 30 days unless you state otherwise. The 30 days may be different from state to state.

That's why you see "as is" signs.

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Chris Lockwood

15 years ago

Originally Posted by GarrieWilson

It's the opposite. You are required to give a cash refund for 30 days unless you state otherwise. The 30 days may be different from state to state.

It must just be your state, since I've never heard that before. I find it hard to believe there would be such a sweeping law like that- I can return a gallon of milk after 3 weeks and get a refund? I can buy a TV or computer, use it for 28 days, then get a refund?

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GarrieWilson

15 years ago

Originally Posted by Chris Lockwood

It must just be your state, since I've never heard that before. I find it hard to believe there would be such a sweeping law like that- I can return a gallon of milk after 3 weeks and get a refund? I can buy a TV or computer, use it for 28 days, then get a refund?

Guess you missed a key phrase...

"The 30 days may be different from state to state."

I also said "unless stated otherwise"

The laws are also different for other items. For example, KY has a law on refunding/exchanging tobacco and alcohol. This law, would supersede.

Do some research on implied warranties and refunds.

Garrie

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Chris Lockwood

15 years ago

Originally Posted by GarrieWilson

Guess you missed a key phrase...

"The 30 days may be different from state to state."

I also said "unless stated otherwise"

The laws are also different for other items. For example, KY has a law on refunding/exchanging tobacco and alcohol. This law, would supersede.

Do some research on implied warranties and refunds.

I didn't miss any phrases; maybe you missed where I said that must be in your state. And I'm guessing every merchant "states otherwise" so then what is the point of a law like that?

Implied warranty is different from a money-back guarantee. One says the product will do what is claimed- an oven will cook food, a TV will display TV signals. The other lets the customer return the item just because he doesn't like it.

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Floyd Fisher

15 years ago

Guarantees increase conversions.

This has been tested over and over, and it still proves to be true.

It's also a known fact that the longer the guarantee, the less the refunds. Want to really get rid of refunds? Back your products for a year and watch what happens.

Newegg is in a different situation. Computer parts can be easily damaged by the consumer, and in most cases it's very tough to prove otherwise.

I've seen tons of people smoke hardware, then try and return it to the vendor for a refund, so I can understand why Newegg has the policies they do.

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Mike Williams

15 years ago

Originally Posted by Floyd Fisher

Guarantees increase conversions.

This has been tested over and over, and it still proves to be true.

It's also a known fact that the longer the guarantee, the less the refunds. Want to really get rid of refunds? Back your products for a year and watch what happens.

Newegg is in a different situation. Computer parts can be easily damaged by the consumer, and in most cases it's very tough to prove otherwise.

I've seen tons of people smoke hardware, then try and return it to the vendor for a refund, so I can understand why Newegg has the policies they do.

Floyd,

You've obviously had a very different testing experience than I did. I found that a longer guarantee led to as many if not MORE refunds. Was your test in the IM niche?

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John Derrick

15 years ago

How about a digital camera?

With a no refund, and 30 day only replacement, I will have to open and test this Christmas gift BEFORE Christmas to make sure it works, or else I would supposedly have no recourse.

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Floyd Fisher

15 years ago

Originally Posted by John Derrick

How about a digital camera?

With a no refund, and 30 day only replacement, I will have to open and test this Christmas gift BEFORE Christmas to make sure it works, or else I would supposedly have no recourse.

Camera should have a guarantee from the manufacturer (usually one year, may be longer or shorter). If it doesn't work, you can get an RMA from them for replacement.

Just a thought.

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globalpro

15 years ago

ALSO, when you accept paypal I believe you have to offer money back also.

I would check on this. As I understand, they offer the refund option, but will honor a 'no refund' policy, if it is clearly stated on your website.

I know a couple of very big name marketers that will do this with something I have purchased. They have a checkbox that verifies you have read their TOS and refund policy, before you can make the purchase. It stated no refunds and the order link wouldn't work, unless you read them.

Must be something to it.

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John

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Shannon Herod 15 years ago

I think having a refund policy is part of business. unfortunately, in some instances the honest people are going to ask for a refund. This is simply part of business.

Are there going to be those serial refunders that try to get everything for free? Of course there is.

When I see that happening I just ban them from purchasing from me ever again.

I still offer a refund policy for the honest people.

For example, I actually requested a refund from a company yesterday. Here's why...

I was part of a membership and joined another membership by the same company at a discounted rate.

In order to get the discounted rate you had to be part of the main membership. This month I decided to cancel the main membership. I assumed that since the discounted membership was attached to that main membership that would also be canceled.

Unfortunately, it was not. So, I was billed for the discounted membership but could not gain access. I did not want the information inside the membership anymore, so it did not matter that I cannot access, but unfortunately I did not want to be part of that membership anymore.

So, I e-mailed the company explaining what had happened and they refunded my money.

I'm still a happy customer and will continue buying products from them, and hopefully they are happy that I'm still one of there customers.

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Shannon Herod
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RichardDean

15 years ago

I use to work at a magic shop and we had "no refunds".

If we did people would buy a trick to learn the secret then return it.

'The secret is told when the trick is sold No Refunds'

"The secret is taught when the magic is bought no Refunds"

I think I might use something like that on my downloads

"The sale is final when you right click and save to your hard drive pile" No Refunds

Can anyone think of something else catchy for downloads

Richard Dean
Godfather of Photo Shop Actions

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Harvey Segal

15 years ago

Originally Posted by RichardDean

'The secret is told when the trick is sold No Refunds'

"The secret is taught when the magic is bought no Refunds"

I think I might use something like that on my downloads

"The sale is final when you right click and save to your hard drive pile" No Refunds

Can anyone think of something else catchy for downloads

"You take the risk - if it's on your disk. No refunds."

Harvey

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RichardDean 15 years ago

Originally Posted by Harvey.Segal

"You take the risk - if it's on your disk. No refunds."
Harvey

Great one

Try this

"Buy with style, that's it once you download your file" No Refunds

Richard Dean
Godfather of Photo Shop Actions
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seobro

15 years ago

I offer a 30 day money back guarantee on physical product. Yes there are serial refunders, but most of the time, visitors feel better knowing they can return product if it fails to perform. Angry customers can get paypal to terminate your service. Also, a friend of mine that was selling diet pills over the internet was hit with a huge fine from the FTC. People claimed they did not lose weight and could not get a refund.

He used to say the people who wanted refunds were crooks.

Well, one big advantage of retail stores is that many small internet companies do not have the same level of customer service - email is a poor substitute to talking face to face with a live human that can answer questions. Therefore you will have more returns because people buy a product that is a poor fit.

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alfredlee

15 years ago

Yes, digital products shouldn't be requested for refunds. I think we should put something like 'Once downloaded, considered sold' or something similar on the sales page to prevent digital product thefts.

Another kind of product that is not applicable to refunds are Personalized Products. When a merchandise is carved with someone else name, it doesn't make sense to accept return as you probably can't resell it anymore.

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John Derrick

15 years ago

A cooling off period?

I like that... ha ha ha

I believe the US used to have a federal regulation similar to that in place, but I have no idea if it remains anymore.

You would think that if such a regulation (or law) were in place for the USA as a whole (rather than State by State) someone here in the WF would know about it.

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John Derrick

15 years ago

I can't see how refunding money would cause a chargeback. That just doesn't make sense.

One would presume that only be not giving refunds you would see a chargeback....

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Johnny Slater

15 years ago

John,

Even when I offered a 30 day no questions asked refund policy I still had people go directly to their CC companies asking for chargebacks without even talking to me beforehand.

You can not predict what your customers will do and there is no way to accurately predict how one product will preform based on the preformace of another.

Originally Posted by John Derrick

I can't see how refunding money would cause a chargeback. That just doesn't make sense.

One would presume that only be not giving refunds you would see a chargeback....

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John Derrick

15 years ago

Originally Posted by Johnny Slater

John,

Even when I offered a 30 day no questions asked refund policy I still had people go directly to their CC companies asking for chargebacks without even talking to me beforehand.

You can not predict what your customers will do and there is no way to accurately predict how one product will preform based on the preformace of another.

Wow... that's just amazing to me.

Thanks for sharing.

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John Derrick

15 years ago

Can anyone link to a case study on any of this?

That may help take some of the guess work out of this.

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Johnny Slater

15 years ago

Chris, some states allow you to over rule the implied warrenty (which emcompasses implied refund policy) by specifically stating in your terms and conditions that you expressly deny it, while some states do not.

Thats why if you look at some terms and conditions you will see a clause added that says that your state may over rule the spelled out terms and that you may have other rights depending on which state you live in.

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sylviad

15 years ago

When you buy software from the store, it clearly states that by opening the package, you accept the product. No refunds - unless the CD is damaged or something.

In your case, newegg isn't saying you don't get a refund. It says:
"Limited Non-Refundable 30-Day Return Policy" whatever that means. Limited to what? I would guess it's much like the retail experience with software. If it's damaged (CD - or other product - smashed or defective from the factory) they will replace it. That's not exactly a refund, but at least you can get one that works. You'd have to check with them to find out what the "limited" means.

Digital cameras can be damaged by owners, you can crash hard drives - in which case they would not refund it because they would lose money. They can't return it to the manufacturer if it was not defective in the first place.

Perhaps newegg has had too many bad experiences trying to get reimbursed for items they take back for refunds.

When the Internet became such a popular place to sell goods, people were obsessed with finding a program to lock their ebooks so people couldn't keep using them if they asked for a refund. Since so many are now pdfs, I'd guess it's because there were too many problems with other ebook formats - wouldn't work on Mac, for instance.

It is a great idea though, being able to lock someone out if they ask for refunds.

Sylvia

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John Derrick

15 years ago

Originally Posted by sylviad

When the Internet became such a popular place to sell goods, people were obsessed with finding a program to lock their ebooks so people couldn't keep using them if they asked for a refund. Since so many are now pdfs, I'd guess it's because there were too many problems with other ebook formats - wouldn't work on Mac, for instance.

It is a great idea though, being able to lock someone out if they ask for refunds.

Sylvia

Now wouldn't it be great if Adobe built that in to a future release?

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Fabian Tan

15 years ago

Been getting more refunds during this recession, but then my sales have gone up too. I have already passed the $6k sales mark for this month and on course for another 5-figure month, despite the refunds.

I seem to be getting more refunds for higher priced products (anything above $50). Too painful for some people to part with in this emotional (economic) climate.

I will probably eliminate money-back guarantees for higher-priced products. You don't see people buying an encyclopedia from Borders and getting their money back and keeping the encyclopedia. Rules are meant to be broken.

Fabian

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