Refund Policy
What is it
A statement outlining the conditions under which a client can return goods or cancel services for a refund. It defines timeframe, condition, and method of refund.
When is it required
It is mandatory in many regions for online sales (consumer rights). It builds trust even when not legally enforced for B2B.
Consumer rights regulations
| Region | Rule Name | Requirement |
|---|---|---|
| EU / UK | Cooling-off Period | Consumers have 14 days to cancel an online order for any reason and get a full refund. |
| USA | State Standard | No federal mandate, but "All Sales Final" must be conspicuously displayed (e.g. CA, NY) if no refund is offered. |
| Australia | Consumer Guarantee | Refunds mandatory if goods are faulty. "No Refunds" signs are illegal. |
Restocking fees
In B2B transactions, you can often charge a "Restocking Fee" (e.g. 15%) for returns of non-defective goods to cover logistics. In B2C (EU), you generally cannot charge this if the return is within the 14-day statutory period.
Common pitfalls
- Copying a generic policy that does not apply to the specific business model. It must be relevant.
- Making the return window too short for reasonable inspection. This frustrates customers.
- Hiding the policy in fine print where it is easily missed. Courts often invalidate hidden terms.
Common mistakes when filling the field
- Being vague about "satisfaction guarantees" without defining terms.
- Failing to specify who pays for return shipping. This is a common source of arguments.
- Contradicting terms stated in the main service agreement.
Why is it there
It manages client expectations and reduces disputes. It serves as a pre-agreed resolution mechanism. It complies with consumer protection laws.