Client asking for a refund

laurencewins

13 years ago

Why do they want a refund? Have you done work for them for that month?

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iAmNameLess

13 years ago

Originally Posted by Big Gee

Am I in the wrong? I don't want to be a jerk, but had I known ahead of time I could have filled the spot with another client.

Yes. You are in the wrong. The client deserves a refund since work hasn't begun on the following month. No court would rule in your favor, and the money likely isn't worth the bad reviews and troubles you will have for not refunding. Maybe add a cancellation fee, but you can't refuse a refund in this case.

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Big Gee 13 years ago

Yeah thats what I feel is right and would be what I would want if I was on the other end. I will refund 1/2 of the fee.
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Big Gee

13 years ago

the month is upcoming June 13th-july13th. I have them paying ahead of time before the due date so there is no interruption of service..They want a refund because they need to make some cuts. I only maintain the website.

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J R Salem

13 years ago

You should have contracts in place - let this be the lesson that motivates you to get it put together.

I do agree you should refund if no work has been done.

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topnichewebsites

13 years ago

Just refund and move on and save yourself the headache. Make sure you have a TOS / contact in place to avoid this in the future.

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Big Gee

13 years ago

They wanted to revert back to a previous contracts terms, which would have required a 30 day notice for cancellation. It's now 2 days before, but again there is no contract in place. So I will refund 1/2 and continue to work the remaining time until the end of this month.

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Claude Whitacre

13 years ago

Originally Posted by Big Gee

They wanted to revert back to a previous contracts terms, which would have required a 30 day notice for cancellation. It's now 2 days before, but again there is no contract in place. So I will refund 1/2 and continue to work the remaining time until the end of this month.

Maybe they will be OK with that.

Me? I would give them a 100% refund on work I haven't done yet, or for a service I haven't provided yet.

If I have a client that calls me the day (or the day before/after) the billing goes through...if they want a refund, I give it to them.

That's what reputable companies do, not guys that want to justify not giving money back.

Believe me, if you were offered a 50% refund, you wouldn't think you were treated fairly.

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DaniMc

13 years ago

I never refund for work that has been done.

But work that is scheduled for the future? Give it all back dude. Keeping half is not worth the ill will and is not what you would want someone to do for you.

Be flexible with them - they will stay a customer for a long time. If you only refund half, the tiniest seed of bad will starts to grow and they will replace you with someone else.

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Big Gee

13 years ago

I think its fair to offer a split for both of us and continue working until the end of the month. I don't think it makes me a company that is not reputable though.
I get my money upfront to make sure that I do not do work and end up getting stiffed.

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mrjosco

13 years ago

Originally Posted by Big Gee

I think its fair to offer a split for both of us and continue working until the end of the month. I don't think it makes me a company that is not reputable though.
I get my money upfront to make sure that I do not do work and end up getting stiffed.

But you haven't done any work...

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Joel Young

13 years ago

Originally Posted by Big Gee

I think its fair to offer a split for both of us and continue working until the end of the month. I don't think it makes me a company that is not reputable though.
I get my money upfront to make sure that I do not do work and end up getting stiffed.

No, it is not fair. You say that the client canceled the upcoming month, which means a month that has had no service yet because it's in the future. The 13th to the 13th. It is not yet June 13th, therefore you cannot rightly, ethically and morally keep any percentage of that money.

Doing so does make you a bad company.

The money you get up front is so the customer doesn't stiffed. He has trusted you by paying for something he hasn't yet gotten.

If you can't understand that, you're in the wrong place.

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iAmNameLess

13 years ago

Originally Posted by Big Gee

I think its fair to offer a split for both of us and continue working until the end of the month. I don't think it makes me a company that is not reputable though.
I get my money upfront to make sure that I do not do work and end up getting stiffed.

But it does make you not reputable... you're wanting to keep money for work you haven't completed or even started. Payment was for the 13th of this month and the 13th hasn't hit yet, so he cancelled before payment was due. It is actually illegal for you to deny a refund to him in this scenario. The most you could even get away with is some small, 20% cancellation fee but you don't have a written contract so it isn't going to work.

If it is a matter of you desperately needing money, then tell him that I guess... but you can't really deny the refund. It is bad business...

You get money up front so you don't get stiffed, but now you have money up front, but the customer cancelled, so you have money for something you haven't done, and your customer is stiffed!

Trust me... I've had cases where I've done a boat load of work, and people wanted a refund. At the time I said no way, no refund for work already completed, but let me tell you, it has haunted me.

You have to give refunds... it is a matter of doing business.

If you want to save this month's sale, then maybe you can. Offer some extras. Maybe tell him that you're sorry, you have been behind on bills and can't issue a refund right now but you would gladly continue this month of service and throw in a couple extras for the inconvenience.

Your customers are your life... even ex customers. I make it a point to call ex customers semi regularly and just stay on good terms, some come back, some refer others to us, but it is important to do what you can to not have a bad relationship.

Relationships are what will keep you in business. Relationships are also why many will go out of business. It sucks when someone cancels on you but you have to step up, and understand that this is your business and you're in it for the long haul.

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DaniMc

13 years ago

Originally Posted by iAmNameLess

Trust me... I've had cases where I've done a boat load of work, and people wanted a refund. At the time I said no way, no refund for work already completed, but let me tell you, it has haunted me.

You have to give refunds... it is a matter of doing business.

Hey can you please expound on this a little more? I don't refund for work already done but I feel I may have something more to learn here.

What has your experience been after changing your policy? What happened that caused you to change it?

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iAmNameLess

13 years ago

Originally Posted by Dan McCoy

Hey can you please expound on this a little more? I don't refund for work already done but I feel I may have something more to learn here.

What has your experience been after changing your policy? What happened that caused you to change it?

Well it always depends... but..

If you accept credit cards, debit cards, whatever... you might as well give a refund because chances are you are going to lose a chargeback case. If you even receive a chargeback, you're going to lose the money anyway, and be fined on top of it. If it is a bad enough ratio, then you risk losing your account or having funds on a 30 day to 180 day hold.

If you take checks, which is the safest way of doing things, then you're safe from chargebacks. However, a complaint to the bbb will take up your time, and sure you can resolve the issue or offer to go to arbitration (which you will likely lose if they comply as well), but then they're also referred to file a formal complaint with your state's attorney general's office. Once it gets to that point, you will be summoned, have to provide a bunch of records, tax information, and once the AG gets involved even if you're 100% legit, they will find something against you.

These 2 reasons, are strictly from a time standpoint... now if you get into negative word of mouth, and negative reviews online, you're now talking about money, not just time. You will certainly take a hit with lost revenues because of a single complaint even if you have 10 positive reviews.

Every case is different... if you're providing PPC for a client and what he or she pays you goes into that budget, I would agree that you don't need to refund that. If you're building a website, and after it is built and they WERE initially happy, I would say you don't need to refund that either. If it is a matter of them not being happy, then it is up to you to make them happy or refund them. It all is circumstantial, but ultimately, refusing a refund can end up costing you 10X to 100X more than the refund amount.

This is why it is important to manage expectations, position yourself and use leverage before even making the sale.

Web design - If you're not happy, we'll keep at it until you are.... already tells them no refunds, but you'll be happy to make changes to make them happy.
SEO - no lengthly contracts, you can cancel anytime... this tells them you're consistently working for them and want them to continue to be a customer. If they want to cancel, fine... no contracts to deal with giving them a 6 month or 1 year term with you, they can just cancel.

See, just a few things you can do to lower the risk of someone even wanting a refund. Simple stuff.

But you have to remember when building a business, you do not want negative word of mouth. You don't want angry people chasing you around review site to review site trashing you. It costs you money.

Looking back, I've had a couple unhappy clients, and the amount I could have refunded them would be so much lower than the amount of money they have cost me with bad reviews, and stress.

Hindsight is 20/20... live and learn.

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DaniMc 13 years ago

Originally Posted by iAmNameLess

Well it always depends... but..

Hindsight is 20/20... live and learn.

Thank for taking the time to write all that.

You may have just changed my mind about refunds - for some products anyway.
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- Claude Whitacre 13 years ago
  
  You know all those infomercial guys that went to jail? Paid huge fees?
  
  They refused to give a refund...on principle.
  
  Some people are evil. Some are crazy. Giving a 100% refund just takes the wind out of their sails. Now you can move on.
  
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  DougPage 13 years ago
  
  Big Gee, I didn't catch where you might have said what service you are providing. When the client approached you did you talk to them about why they needed to make the cuts? If you did, did you analyze to see if there was something else you could do for them that would benefit them more at the moment? Could you scale back the current service so that you are not being completely cut off? This could be an opportunity for you to shine and help them if they are struggling. If there is no way to help with other services, I would say "I know we agreed on a 30 day cancellation period, and I could really use that money right now, but we have enjoyed a great relationship and I hope that you will consider using my services again in the future when your business has stabilized." May get you the business back in the future.
  
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KabirC

13 years ago

Originally Posted by Big Gee

I think its fair to offer a split for both of us and continue working until the end of the month. I don't think it makes me a company that is not reputable though.
I get my money upfront to make sure that I do not do work and end up getting stiffed.

You are so wrong right here, they need to make cuts so they want a refund for work that hasn't been done but you are still going to make them pay 50% of it for a service that they don't need or will be able to live without. Give them the full refund and move on.

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PROmotions LLC

13 years ago

This is what happens when you don't have a Terms of Service Agreement, that customers accept or decline before purchase.

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Eddie Spangler

13 years ago

If you didnt do any work and have not had to pay out anything to provide them service up until this point its hard to justify charging. ESPECIALLY when there is nothing written to the contrary.

If you are trying to justify keeping some of the money cuz you need it or you think half is fair or whatever then so be it.

I dont think it necessarily makes you disreputable to deny them BUT
it makes you reputable as SH!T to say okay no problem, I dont want your money if I havent given you anything in return.

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DaniMc 13 years ago

Originally Posted by Big Gee

I don't want to be a jerk, but had I known ahead of time I could have filled the spot with another client.

It is not THEIR fault you didn't have another client in the pipeline. This is your fault. Don't transfer the blame to them. You just need to get more clients - that's all.

Originally Posted by Big Gee

I get my money upfront to make sure that I do not do work and end up getting stiffed.

YOU are the one stiffing THEM. You did not do work. Which means you provided no value for the money you are taking. Business is about exchanging value for value. It is NOT about taking money from people when you haven't given them value for that money.
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Big Gee

13 years ago

Originally Posted by Eddie Spangler

If you didnt do any work and have not had to pay out anything to provide them service up until this point its hard to justify charging. ESPECIALLY when there is nothing written to the contrary.

If you are trying to justify keeping some of the money cuz you need it or you think half is fair or whatever then so be it.

I dont think it necessarily makes you disreputable to deny them BUT
it makes you reputable as SH!T to say okay no problem, I dont want your money if I havent given you anything in return.

point taken. The owner wanted the same terms as the previous contract that was in place. It required a 30 day notice. BUT again the this is verbal not written .. so I am where I am. If HE wants to be reputable himself he will honor HIS word too right ?

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DaniMc 13 years ago

Originally Posted by Big Gee

If HE wants to be reputable himself he will honor HIS word too right ?

Man if you have this type of mindset your business will always struggle. Evolve your mind beyond "I'm right you're wrong" and begin to think "How can I best serve this person."

That is how you will grow as a business owner.
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Big Gee

13 years ago

OK so again and this is the last I will bring up this point. If we had a verbal and we are both trusting of each other to honor the same terms as the previous contract which required a 30 day notice of cancellation...He should honor that too if he is reputable himself ?

Yes I do need the money, but I have the means to pay him now. So if I am truly in the wrong I will own up to it. It's not me to be a dirt bag and it never will be, the whole reason I am posting this here. I am trying to hammer this out and I appreciate the feedback on how to handle this.

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DaniMc

13 years ago

Originally Posted by Big Gee

OK so again and this is the last I will bring up this point. If we had a verbal and we are both trusting of each other to honor the same terms as the previous contract which required a 30 day notice of cancellation...He should honor that too if he is reputable himself ?

Yes I do need the money, but I have the means to pay him now. So if I am truly in the wrong I will own up to it. It's not me to be a dirt bag and it never will be, the whole reason I am posting this here. I am trying to hammer this out and I appreciate the feedback on how to handle this.

Yes - look, you have a point. I don't think anyone has said you are crazy for thinking the way you are. YES you should expect him to hold up his end.

However, you really shouldn't make your choices based on what he does. You can't control his integrity and ethics. If you had it all written down and it was clear as day then sure, you could hold him to it. But that isn't the case.

I have a product I sell several months in advance. I discount the setup if they agree to buy a certain number of months. It is clear that if they cancel, they wont pay for that month but they WILL owe me the discount I gave for the setup.

Just me - I'd give him the money and avoid animosity in the relationship. It doesn't seem like he is trying to take advantage of you. If that were the case then my answer would be different.

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Big Gee

13 years ago

Originally Posted by Dan McCoy

Yes - look, you have a point. I don't think anyone has said you are crazy for thinking the way you are. YES you should expect him to hold up his end.

However, you really shouldn't make your choices based on what he does. You can't control his integrity and ethics. If you had it all written down and it was clear as day then sure, you could hold him to it. But that isn't the case.

I have a product I sell several months in advance. I discount the setup if they agree to buy a certain number of months. It is clear that if they cancel, they wont pay for that month but they WILL owe me the discount I gave for the setup.

Just me - I'd give him the money and avoid animosity in the relationship. It doesn't seem like he is trying to take advantage of you. If that were the case then my answer would be different.

I get it..."the customers always right" thank you for your input. I think now even if he agrees to the partial refund I will just return it all minus service fees from Paypal. I'm not trying to scam, just taking my lumps and learning. Thanks again.

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Eddie Spangler 13 years ago

Originally Posted by Big Gee

I get it..."the customers always right" thank you for your input.

Ha HA , thats a whole nuther topic, but the customer is NOT always right.
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Claude Whitacre

13 years ago

Originally Posted by Big Gee

I get it..."the customers always right" thank you for your input. I think now even if he agrees to the partial refund I will just return it all minus service fees from Paypal. I'm not trying to scam, just taking my lumps and learning. Thanks again.

Big Gee; Please don't try to keep a few pennies because it cost you to process.

No legitimate business deducts the credit card fees from refunds.
If any company tried to save a dollar by deducting Paypal fees? They would look very small and anal.

By now, this is probably a done deal.....I just saw this and thought I would comment.

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Kay King

13 years ago

I think its fair to offer a split for both of us and continue working until the end of the month. I don't think it makes me a company that is not reputable though.
I get my money upfront to make sure that I do not do work and end up getting stiffed.

So you stiff your clients? Yes, this can hurt your company's reputation and it should. You think it's "fair" because it's what you want.

A client is allowed to stop your service - you have no contract in place and that's your fault - the client does not want you to work an additional half month and has said so.

It's your choice and your business but if this customer is suffering a short term problem you've lost him totally - and any work he might send your way.

Like Claude - I expect you've already done this but I doubt many here will tell you it's the right thing to do.

kay

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Eddie Spangler

13 years ago

Originally Posted by Big Gee

OK so again and this is the last I will bring up this point. If we had a verbal and we are both trusting of each other to honor the same terms as the previous contract which required a 30 day notice of cancellation...He should honor that too if he is reputable himself ?

Yes I do need the money, but I have the means to pay him now. So if I am truly in the wrong I will own up to it. It's not me to be a dirt bag and it never will be, the whole reason I am posting this here. I am trying to hammer this out and I appreciate the feedback on how to handle this.

I hear you on the 30 day thing but look at it from the other guys point of view:
He is already paying you 30 days ahead of time and now according to these "terms" he is required to know 6o days in advance before he wants to cancel.
That is a pretty steep expectation when dealing w/ local clients.

In his mind, AS THERE IS NOTHING WRITTEN, he probably thinks he IS GIVING you 30 days notice.

The way to handle it as you mentioned is to be a professional in future and a WRITTEN agreement and if that written agreement has terms that YOU (from a 3rd party point of view) think might be confusing then spend time to define that and go over with the person prior to taking the job.

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Claude Whitacre

13 years ago

Originally Posted by Big Gee

OK so again and this is the last I will bring up this point. If we had a verbal and we are both trusting of each other to honor the same terms as the previous contract which required a 30 day notice of cancellation...He should honor that too if he is reputable himself ?

Yes I do need the money, but I have the means to pay him now. So if I am truly in the wrong I will own up to it. It's not me to be a dirt bag and it never will be, the whole reason I am posting this here. I am trying to hammer this out and I appreciate the feedback on how to handle this.

Believe me, we have all been there, and we all feel your pain. Giving money back is always more painful that just not getting paid.

But it isn't a matter of "Right or wrong". The professional answer is to offer o refund the whole month. I can't see another answer.

Now, you can call the client and say "Before I make you an offer, I just want you to know that I am willing to refund the whole month. But here is my idea..." and you ,may offer a few free months to extend the service...or offer a 50% discount....But....

There is only one professional answer, offer a full refund.

It doesn't matter if they are professional. It doesn't matter what kind of person they are. It should only matter to you what kind of person you are. Take the high road. Believe me, I know how you feel. But in 5 years, you'll be richer for giving the darn refund.

I can tell by your posts that you are an ethical person. Hedging to keep some of the money will eat at you the rest of your life.

I speak from experience here.

The right thing is to offer a refund. We all feel your pain, but that's what you need to do.

Originally Posted by Big Gee

I get it..."the customers always right" thank you for your input. I think now even if he agrees to the partial refund I will just return it all minus service fees from Paypal. I'm not trying to scam, just taking my lumps and learning. Thanks again.

Big Gee; No, the customer is usually wrong. But how you handle it tells everyone what kind of person you are. We are proud of you.

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misterme

13 years ago

It simply boils down to this: they don't want your service. And would you want to force any payment on someone who doesn't want your service? Would you want to pay for service you don't want? That's the kind of crap we have to put up with from monopolies and huge uncaring businesses what with their termination fees which are more like penalties or choke holds to keep you from leaving - and you know how people feel about them.

We're not them. Leave those clients with a good taste in their mouth about you. They may come back someday or recommend others. Or both. But only if you do the right thing now though. Don't burn bridges over a few dollars.

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rodsav

13 years ago

I would give the client his refund and let it end on good terms. You business will be better off in the long run.

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PerformanceMan

13 years ago

Business is not complicated.

You create a billing agreement.

The client agrees to it.

You HONOR your own agreement every time, no matter what.

That way you can always refer to the agreement and keep everything business like. I've been in business since 1991 and I NEVER lose a penny over a dispute about any sort of billing. Make sure the customer agrees to your policy and enforce it.

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pablo4103

13 years ago

Definitely refund. No work done. Flip flop it. Would you expect a refund if no work had been done?

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TeamBringIt

13 years ago

Originally Posted by Big Gee

They pay ahead of time for the upcoming month of services. (the 13th of the month to the 13th of the following month) They are asking for a refund before the upcoming month which has been paid already.
There is no contract, just a verbal agreement and communication through email.
I don't want to refund anything because they did not give me a notice, but I will be willing to refund 1/2 minus miscellaneous charges because of the fact that we had nothing in place.
Am I in the wrong? I don't want to be a jerk, but had I known ahead of time I could have filled the spot with another client.

1. You don't have a contract, with client(s)
2. You want to keep money, for work you have not done.

Both of these are a huge, no-no. Just move on and refund, the client. people, do talk and if you jerk this client, he/she will not talk good things...about you and this can and will ruin your reputation. A poor reputation kills, your credibility and business. Do, you really want that? is it, really worth that? just for 1 client?

You decide, and hopefully you make the right choice...

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Matt Lee

13 years ago

You're reputation is worth 100,000X whatever refund they requested. Who knows, maybe they'll end up referring you for being such a cool guy about it. Integrity is something this industry needs a lot more of. Best of luck!

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SashaLee

13 years ago

Hi there,

Hopefully the OP has taken the advice here and just refunded the client. In the scheme of things, it only creates goodwill with this client.

If the client receives their money back, they think - "This person is reputable. They're nice people". You might just get a referral out of it and certainly won't get any bad mouthing from your client.

If you act cheap with them they'll have a bad taste in their mouth and won't have anything good to say about you and will most likely talk bad about you. That kind of negative talk is not good for your business.

All the best,

Sasha.

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Big Gee

13 years ago

Thank you everyone for your advice, the client was refunded no money kept.

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Joel Young 13 years ago

Originally Posted by Big Gee

Thank you everyone for your advice, the client was refunded no money kept.

Good job! You made right decision, and will benefit from that in the long run.

Now I sit back and watch how many people continue responding to this thread without having read it first to see the outcome.
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NewParadigm

13 years ago

I would give a full refund on any advance payment. You won't think that business telling 10-20 of their business peer friends that you "jacked them around" will be fair either.

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JustinDT

Banned 13 years ago

Originally Posted by Big Gee

They pay ahead of time for the upcoming month of services. (the 13th of the month to the 13th of the following month) They are asking for a refund before the upcoming month which has been paid already.
There is no contract, just a verbal agreement and communication through email.
I don't want to refund anything because they did not give me a notice, but I will be willing to refund 1/2 minus miscellaneous charges because of the fact that we had nothing in place.
Am I in the wrong? I don't want to be a jerk, but had I known ahead of time I could have filled the spot with another client.

I'd say refund 75% just to be fair. But because of the short notice they have no idea where the funds could have been allocated to. In the future I would always sign a consultant agreement.