Refund Policies on Digital Ebooks

30 replies
Hey there. This is my first post on the Warrior Forum. I'm a complete beginner to Internet Marketing, so bear in mind that the following will probably have some errors.

So I've heard that there essentially two policies regarding refunds when selling a digital ebook, either to offer a refund or not. Obviously there are advantages and disadvantages with regards to both. I'm wondering which is more beneficial in the long term.

Thanks in advance!
#digital #ebooks #policies #refund
  • Having a refund policy will help you sell more books. If the material is any good, most will not ask for a refund just to get the book for free. I would always offer a refund policy.
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    • Profile picture of the author BIG Mike
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      • Profile picture of the author MissTerraK
        You know Mike,

        You have a very valid point there. As I think about it, never have I ever come across a refund policy from any of my favorite authors.

        I've read some of their work that wasn't up to par in my opinion, but never dreamed of asking for a refund.

        I love my Kindle Fire! Oops, off topic...

        I didn't offer a refund policy on my digital book either and have never been asked for one.

        However, I do with my freelance writing and that's where my mind must have been. :rolleyes:

        Per your testing, it seems having a refund policy is sending subliminal messages, lol.

        Terra
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  • Profile picture of the author Michael Oksa
    For ebooks, I would just offer a refund, no questions asked. It's not as big of a problem as some people would have you believe. My refund rate is well under 1% and it's just easier to give the refund.

    The standard argument is that you will get more sales if you offer a solid refund policy. I believe that to be true. On the other hand, you will attract some freebie seekers (more in some niches than others), but don't let that bother you.

    There is one other thing to consider: if you DON'T offer refunds, then you run a much higher risk of getting chargebacks, and those can put a real dent in your business.

    So, my advice is to offer a 100% money back, no questions asked guarantee. Then create high-quality products that are more than worth what people spent on them.

    All the best,
    Michael
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    • Profile picture of the author dab123
      Originally Posted by Michael Oksa View Post

      For ebooks, I would just offer a refund, no questions asked. It's not as big of a problem as some people would have you believe. My refund rate is well under 1% and it's just easier to give the refund.

      The standard argument is that you will get more sales if you offer a solid refund policy. I believe that to be true. On the other hand, you will attract some freebie seekers (more in some niches than others), but don't let that bother you.

      There is one other thing to consider: if you DON'T offer refunds, then you run a much higher risk of getting chargebacks, and those can put a real dent in your business.

      So, my advice is to offer a 100% money back, no questions asked guarantee. Then create high-quality products that are more than worth what people spent on them.

      All the best,
      Michael
      No kidding. Its worth a few refunds to avoid chargebacks. The will mess up your merchant accounts and cost you big money.
      My company helps businesses like yours dispute them and we are successful 80-85% of the time but its best to just avoid them altogether.
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  • Profile picture of the author KimJongUn
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    • Profile picture of the author MissTerraK
      I couldn't have said it any better than that, Michael.

      You pegged it!

      There's really no need for anyone to say anything more.

      Terra
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  • Profile picture of the author John Romaine
    If you dont want to offer refunds, dont.

    Dont feel as though you need to because someone told you to.

    If it means selling less, so be it. Id rather deal with decent customers that want to do business, not knuckleheads that are only concerned about getting their $7 back.
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    • Profile picture of the author contentwriting360
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      We're on the same wavelength, at least, on that point of view, John.
      Refund Policy is there to secure both buyer and seller. A 'Refund Policy' does not always mean you'll offer a 100% money-back guarantee. In our case, we have strict requirements before we process a refund. Only serious business-minded people would really exert an effort to justify why they truly deserve a refund (speaking from experience).


      Originally Posted by John Romaine View Post

      Id rather deal with decent customers that want to do business, not knuckleheads that are only concerned about getting their $7 back.
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      • Profile picture of the author TheArticlePros
        Originally Posted by KimJongUn View Post

        No refund offered means the person obviously doesn't have confidence the product works. I would avoid such sellers.
        ...OR it could mean that you've been in the market long enough to realize that, no matter what you do or what you sell, there are going to be people trying to take advantage of you. I ran a retail store for almost 10 years that had a no refunds policy, and 99% of the people who tried to get me to bend the policy were trying to scam me. They'd buy something to use for a few hours then try to bring it back when they were done with it, and the business I had didn't lend itself very easily to that kind of market.

        Originally Posted by Michael Oksa View Post

        There is one other thing to consider: if you DON'T offer refunds, then you run a much higher risk of getting chargebacks, and those can put a real dent in your business.
        I knew it would happen one day Michael, but I've finally come across a post where I disagree with you.

        If you set your Paypal settings accordingly, purely digital items don't have buyer protection built-in and it's up to the buyer to do his/her due diligence before buying a product. (That's how my WSO is setup.) You just have to make sure it's stated very clearly before the point of sale.

        The other key is to make sure that your product is top quality. If you're offering garbage (not you, Michael, but generic 'you' reading this), then you're going to get chargebacks and refund requests. If the material you offer is better than 99.99% of what's out there, those requests are very rare and, if you spend the time talking with the customer/client, you'll find that s/he does want a refund but some sort of personal service, help, or guarantee.

        -- j

        source: 18 years of customer service & counting
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  • Profile picture of the author David Keith
    well, I am not in the IM niche which has one of the higher refund rates, but I have operated in the adult niche some which offers some of the highest refund and charge back problems of any niche.

    My philosophy was that I could always make more sales than I could save by expending the same amount of time and mental energy on driving sales rather than fighting refunders.

    Did I leave some money on the table a few times...I am certain I have over the years. But I have usually found it difficult to build a business by spending my time fighting people who are for the most part cheats and scammers for a few coins.

    They only exception to this in my book is that you can't get a reputation for being an easy mark. If you ever find a spike in refunds for a decent period of time. I have found that is the time to get tough for a little while and put the brakes on that reputation before it has a chance to get started good.
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  • Profile picture of the author Mark Hess
    If people want their money back bad enough, chances are they will get it back. I've seen threads where people go to crazy lengths over $10 and you don't really want that.

    After selling my fair share of stuff online, I'd have to say you're better off just having an open refund policy... the people that use the WSO and Clickbank marketplaces like libraries could care less what refund policy you have in place.

    This is a much different approach then I had in all my previous years online.

    Bottom line just go with a policy you're comfortable with...

    OR

    Go with the 'VA' strategy...

    There are some sellers that have one VA (that actually doesn't exist, they made them up) that gets blamed for EVERYTHING.

    But you can take it a step further...

    You need to make up three VA's that their specific task is to handle order processing and customer service. (Give them all women's names since generally, people get less pissed at women.)

    Then you assign them excuses...

    Mary - she never seems to be in the office.
    Cathy - her job is to tell customers she can't find their transaction id.
    Elizabeth - her responsibility is to pass on the request to either Cathy or Mary.

    The end result looks something like this...

    Customer Email #1 - I would like a refund my transaction id is: 38948954895.
    Elizabeth Responds - "Sorry you weren't happy with the product, I will pass along your information to Cathy".

    Customer Email #2 - I put in a request for a refund and never heard anything back.
    Cathy Responds - "Elizabeth sent me your request, I couldn't find your transaction id in our system, I'll have to talk to Mary and get back to you."

    Customer Email #3 - Still haven't heard anything..
    Elizabeth Responds - "I'm not really sure what's going on, Cathy said that she couldn't find you in our system and Mary is out of the office"

    Etc... you can keep this going until people finally give up.

    It also helps if you have a forth VA Judy who's in training and accidentally deletes support tickets.

    (The bottom part of this post is not meant to be serious.)
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    • Profile picture of the author SuperDJ
      Originally Posted by Mark Hess View Post

      If people want their money back bad enough, chances are they will get it back. I've seen threads where people go to crazy lengths over $10 and you don't really want that.

      After selling my fair share of stuff online, I'd have to say you're better off just having an open refund policy... the people that use the WSO and Clickbank marketplaces like libraries could care less what refund policy you have in place.

      This is a much different approach then I had in all my previous years online.

      Bottom line just go with a policy you're comfortable with...

      OR

      Go with the 'VA' strategy...

      There are some sellers that have one VA (that actually doesn't exist, they made them up) that gets blamed for EVERYTHING.

      But you can take it a step further...

      You need to make up three VA's that their specific task is to handle order processing and customer service. (Give them all women's names since generally, people get less pissed at women.)

      Then you assign them excuses...

      Mary - she never seems to be in the office.
      Cathy - her job is to tell customers she can't find their transaction id.
      Elizabeth - her responsibility is to pass on the request to either Cathy or Mary.

      The end result looks something like this...

      Customer Email #1 - I would like a refund my transaction id is: 38948954895.
      Elizabeth Responds - "Sorry you weren't happy with the product, I will pass along your information to Cathy".

      Customer Email #2 - I put in a request for a refund and never heard anything back.
      Cathy Responds - "Elizabeth sent me your request, I couldn't find your transaction id in our system, I'll have to talk to Mary and get back to you."

      Customer Email #3 - Still haven't heard anything..
      Elizabeth Responds - "I'm not really sure what's going on, Cathy said that she couldn't find you in our system and Mary is out of the office"

      Etc... you can keep this going until people finally give up.

      It also helps if you have a forth VA Judy who's in training and accidentally deletes support tickets.
      This is probably the most hilarious thing I've read on this forum. Do people actually do this? hahaha
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    • Profile picture of the author John Romaine
      Originally Posted by Mark Hess View Post

      Go with the 'VA' strategy...

      There are some sellers that have one VA (that actually doesn't exist, they made them up) that gets blamed for EVERYTHING.

      But you can take it a step further...

      You need to make up three VA's that their specific task is to handle order processing and customer service. (Give them all women's names since generally, people get less pissed at women.)

      Then you assign them excuses...

      Mary - she never seems to be in the office.
      Cathy - her job is to tell customers she can't find their transaction id.
      Elizabeth - her responsibility is to pass on the request to either Cathy or Mary.

      The end result looks something like this...

      Customer Email #1 - I would like a refund my transaction id is: 38948954895.
      Elizabeth Responds - "Sorry you weren't happy with the product, I will pass along your information to Cathy".

      Customer Email #2 - I put in a request for a refund and never heard anything back.
      Cathy Responds - "Elizabeth sent me your request, I couldn't find your transaction id in our system, I'll have to talk to Mary and get back to you."

      Customer Email #3 - Still haven't heard anything..
      Elizabeth Responds - "I'm not really sure what's going on, Cathy said that she couldn't find you in our system and Mary is out of the office"

      Etc... you can keep this going until people finally give up.

      It also helps if you have a forth VA Judy who's in training and accidentally deletes support tickets.

      Cmon Mark, you have to be joking right?

      Why not just operate a professional business and do the right thing?

      You either grant refunds or you dont. No need for silly games. This kind of thing does my head in as a customer myself. Why encourage it?
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      • Profile picture of the author Mark Hess
        Originally Posted by John Romaine View Post

        Cmon Mark, you have to be joking right?

        Why not just operate a professional business and do the right thing?

        You either grant refunds or you dont. No need for silly games. This kind of thing does my head in as a customer myself. Why encourage it?
        Yes, I was joking...


        Originally Posted by SuperDJ View Post

        This is probably the most hilarious thing I've read on this forum. Do people actually do this? hahaha
        If you have ever purchased from some marketers, it seems like they do this, that's why I was making light of it...
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  • Profile picture of the author sriram rajan
    First --> Lets face it , refund is requirement by your merchant (most likely paypal), so by their terms it is better to leave it out there as they will on most occasions side with the buyer and with digital products this is an grey area.

    There will be few customers requesting refund even if your product is the best in the world, it is better to focus on the remainng 95% of your customers and focus on their Life Time Value, that will be best long term strategy.

    Finally with refunds being the norm, it also shouts out lous confidence in your product.

    One lesson i learnt from Jason fladlein is he has tested it and having a refund increase sales conversions and even if there are a few refund requests (if at all) you will end up making more by having the policy out there.
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    • Profile picture of the author TheArticlePros
      Originally Posted by sriram rajan View Post

      First --> Lets face it , refund is requirement by your merchant (most likely paypal), so by their terms it is better to leave it out there as they will on most occasions side with the buyer and with digital products this is an grey area.
      The only merchant I know of that requires you to conduct refunds is Clickbank with their 60 day guarantee. PayPal has no such policy; they just require that you state your policy somewhere easy for the customer to find it.

      -- j
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    • Profile picture of the author Chris Worner
      Originally Posted by Michael Oksa View Post

      So, my advice is to offer a 100% money back, no questions asked guarantee. Then create high-quality products that are more than worth what people spent on them.

      All the best,
      Michael
      I can't imagine just refunding every request without question looks very good to the risk department of Paypal, should they decide to do a review of your account.

      Originally Posted by sriram rajan View Post

      First --> Lets face it , refund is requirement by your merchant (most likely paypal), so by their terms it is better to leave it out there as they will on most occasions side with the buyer and with digital products this is an grey area.
      First --> Lets face it, you have no idea what your talking about.

      Paypal does not require you to offer refunds, what they do require however is that you make your refund policy very clear, before the user reaches the buy button.

      The only merchant I have ever come across that requires you to offer refunds is Clickbank.

      -Chris
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      • Profile picture of the author Michael Oksa
        Originally Posted by Chris Worner View Post

        I can't imagine just refunding every request without question looks very good to the risk department of Paypal, should they decide to do a review of your account.
        Hi Chris,

        I don't question the person asking for the refund, but I typically respond to PayPal.

        So, if the person starts a dispute, I will ajust give them a refund, but will mention something to PayPal along the lines of "my records indicate that the product was delievered, but to ensure a positive customer experience, I will grant the refund."

        @ BIG Mike. I was thinking of you as I was making the post, and that's why I was talking only about digital e-books. And it would be possible to have a no-refunds policy for those as well. However, while you can explain what software does, you have a hard time expalining what an e-book does. In other words, the only way to explain everything an e-book contains is to display all of the contents of the book, if that makes sense.

        For me it's just easier to have a no questions asked refund policy. The money I would save by not having one isn't worth the hassle. I have such a low refund rate that I would rather just give a refund every now and then, instead of trying to fight it.

        @ JaRyCu. Sorry that I messed up my track record.

        I know that PayPal doesn't offer the same protections for digital products, and it would probably be very easy for me to win PayPal disputes. However, what happens if a dispute falls through? Then it goes to a chargeback if the person used a credit card. Each step of the non-refund process just adds more time and hassle to each dispute. At least that's the way I look at it.

        There is nothing wrong with going one way or the other on refunds, but I still believe that it's just easier to give refunds on digital e-books. I can only speak from personal experience, but my experiences have been mostly positive when it comes to giving refunds without question.

        All the best,
        Michael
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  • Profile picture of the author spriyada
    I always use Clickbank to promote my information products and they require you to have a refund policy. But most of the time this is not used. Just remember to have good quality material.

    As long as you are genuine and just want to help people you will be fine. If you are out to trick people, then you are not going to get too far. Once you build your name as a trusted person within your niche, you won't have problems.

    I like to give the money back guarantee because it helps my customers trust me. But once they see the quality of my products, they never ask for refund.

    I hope this helps.
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  • Profile picture of the author TheSalesBooster
    Just offer a 100% refund policy. It's better to just refund those people and get it over with than have them hound you day in and day out over chump change.
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  • Profile picture of the author KickAss Marketing
    A refund policy is definitely more attractive for buyers and also very attractive to freeloaders. It is good business ethics to offer refund policies; but, not offering refunds is also the right of the seller for some products.

    The trick is just to have your products at best quality as possible because you will always have dissatisfied customers anyway. So just have a modest refund policy (usually not 100% refund) for those who are really earnest in justifying why they were dissatisfied.

    A refund policy may be in the form of a discount on the next purchase or other future purchases. Its up to you actually, different companies have different discount policies. Its not always about having money return to dissatisfied customers. Just make sure that whatever policy you have, the customer is fully aware of it before purchasing the products covered by the policy.
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  • Profile picture of the author zacsmith
    A solid refund strategy is a great risk reversal technique that helps customers feel more secure in making a purchase. We've found that most visitors are instantly suspicious of making online purchases, as they have been ripped off so much over the years.

    We offer a 100% money back guarantee with no questions asked. In fact, there is no limitation period - call me a year later and I'll refund. But it's never happened. When a refund is requested, we process it instantly, then notify the purchaser of the refund and when they can expect it to show up in the account.

    I can count on one hand the number of refunds issued in the last five years. Partly because our publication is a B2B product, not IM. Partly because our site goes overboard to show what the customer is receiving, complete with an evaluation download with actual pages.

    We've tested both with and without a guarantee. Sell more with.

    Just my $.02 from 12 years of selling our flagship product.

    gary
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    • I agree that providing a refund button is important for some digital goods, mostly because it will increase your conversion rates.

      I understand the mindset that providing refunds for digital goods can hurt the product creator for various reasons, but there is risk involved with every business and it is miniscule in comparison to the extra sales generated from a solid refund policy.

      Cheers,
      Chris
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  • Profile picture of the author Mike Hill
    I offer refunds immediately, however when they do a chargeback without contacting me for a refund first claiming no authorization of the sale I blacklist their email, I blacklist their IP and I also provide the IP information via screenshot to PayPal that they in fact purchased and downloaded from the same IP address. PayPal should be able to verify the users IP address they access their PayPal account with during this time period. If I win the dispute I unblacklist their IP so they can have continued access to the product.

    I'm sick and tired of these types of dishonest people who don't think of it as theft. Now if this user had emailed me saying they were unhappy with the purchase I would definitely honor that request.
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  • Profile picture of the author brentb
    Personally what I recommend and do myself is say NO REFUNDS! If they ask for one however, I always give it... chargebacks should be avoided at all costs.

    Yes you can usually win many of them! But those that fight every single one are the ones you will see posting on here and other forums online with posts like "Banned From Paypal, lost $3000 a month income... what to do now?" Trust me, you do not want to be in that situation, especially over a few bucks here and there.
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    • Profile picture of the author Mike Hill
      Originally Posted by brentb View Post

      Personally what I recommend and do myself is say NO REFUNDS! If they ask for one however, I always give it... chargebacks should be avoided at all costs.

      Yes you can usually win many of them! But those that fight every single one are the ones you will see posting on here and other forums online with posts like "Banned From Paypal, lost $3000 a month income... what to do now?" Trust me, you do not want to be in that situation, especially over a few bucks here and there.
      On the other side of the coin, if you never dispute this type of charge back then PayPal could assume you do not want to be looked into and are trying to hide your business dealings by always giving refunds without so much as looking into it further for more clarification.

      For instance, a person who is defrauding someone will not want unnecessary attention so they will immediately do whatever the customer asks of them to not create any unnecessary attention. (That's quite obvious)

      A legitimate business person will ask questions when it comes to a chargeback because the person could have asked for a refund instead so looking further into these matters and giving it more of your attention demonstrates you are genuinely interested in why they decided to create a chargeback in the first place. This shows that you are operating above board with nothing to hide. Now, when you provide additional information such as IP addresses that all match to the same destination then it looks more favorable to you. Regardles if you win or not don't you think a person who is in business for real would want to know more about these situations? I know I sure do...
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      • Profile picture of the author brentb
        Originally Posted by Mike Hill View Post

        On the other side of the coin, if you never dispute this type of charge back then PayPal could assume you do not want to be looked into and are trying to hide your business dealings by always giving refunds without so much as looking into it further for more clarification.

        For instance, a person who is defrauding someone will not want unnecessary attention so they will immediately do whatever the customer asks of them to not create any unnecessary attention. (That's quite obvious)

        A legitimate business person will ask questions when it comes to a chargeback because the person could have asked for a refund instead so looking further into these matters and giving it more of your attention demonstrates you are genuinely interested in why they decided to create a chargeback in the first place. This shows that you are operating above board with nothing to hide. Now, when you provide additional information such as IP addresses that all match to the same destination then it looks more favorable to you. Regardles if you win or not don't you think a person who is in business for real would want to know more about these situations? I know I sure do...
        That is completely wrong! Paypal and other merchant CC processing all have certain chargeback limits. If you go over you are screwed point blank!

        I have never in the history of the internet heard of someone getting their account shut down because they returned peoples money no questions asked to people who were not happy with the product or service. Doesn't happen.

        But you mentioned this applied to people defrauding on Paypal, I surely hope that's not what you are doing? Why would you care if Paypal looked into your business? Id rather them look at my account and see 0 unresolved customer issues then look at it later anyways (which they will look at your account sometime guaranteed) and see 20 issues where 12 were resolved in my favor and 8 were not.

        How I Know: Have experience with PayPal allowing a non-allowed type of business to process with special approval, along with over 4 other PayPal Business Accounts (some doing upwards of 30k monthly), and have experience with 3 Merchant CC Processors.
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        • Profile picture of the author Mike Hill
          Originally Posted by brentb View Post

          But you mentioned this applied to people defrauding on Paypal, I surely hope that's not what you are doing?
          What in the hell would give you that notion? I suggest you RE-READ that post, Hence the other side of the coin you idiot.

          Unlike you I use my real full name here, not hiding like most. All the contact info is right here. So I suggest you go back and carefully read my posts again before suggesting what you had suggested. I work dam hard on my reputation thank you very much!
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  • Profile picture of the author patobryan
    I once heard John Carlton say, "If you're not getting at least a 5% refund rate, you're not trying hard enough."

    Just for the record, I've found that offering a refund rate that extends far into the future cuts down refunds: "if ever, at any point in time, in this universe or any other, you or anybody who looks like you don't agree that this product isn't worth much more than you paid for it I'll refund your money immediately- no questions asked."

    And, I do. I refund fast.

    That way, the customer isn't counting the hours til the refund period runs out... dramatically cuts down refunds.

    If we notice that the same person has bought and refunded multiple times, we just work a little magic so they can't buy from us again.

    And - when you start selling in high volume, you might as well relax about refunds, theft, etc. If my stuff doesn't show up on the torrents right after I launch it, I'm disappointed. It's a fact of life and there are plenty of honest customers to make up for the dweebs that steal stuff.

    One of my mentors told me when I was first starting out- "Don't worry about people stealing your stuff. Worry about making something good enough to steal."
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  • Profile picture of the author Jeff333
    HI

    Put yourself in the shoes of your customers...Would you buy a 25$ 30$ 50$ article without a money back waranty. Personnaly, over 10$, without a money back waranty, I usually don't buy. Of course some people will buy it, use it and will return the product but I don't think it is the majority of the customers as long as your product has a certain value...

    Best Regards

    The Frog Marketer
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  • Profile picture of the author nickburdall
    Great info everyone, thanks!
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