By Erica Houskeeper on July 22, 2020
A hassle-free return policy can make or break a sale. According to UPS, 68% of shoppers check a website’s return and exchange policy before making a purchase.
Cart abandonment is a challenge for retailers, so merchants should make every effort to retain customers during the purchasing process. That’s why many brands now advertise “free, no-hassle” returns and exchanges to increase conversion rates and purchases.
Specific features of your returns policy can deter a sale, so it's important to be aware of what you need to cover by law and what you should cover to achieve customer satisfaction.
But what if a customer tries to make a return outside of your policy? If you’ve included disclaimers in your return policy and a return request falls outside of those parameters, use your discretion on how to handle the situation. In almost every instance, accommodating the buyer can go a long way.
What the Law Requires for Returns
Many retailers allow returns if customers change their minds or receive unwanted items as gifts. While this makes good business sense, retailers aren't legally required to accept returns. Instead, merchants are required by law to accept returns only if the sold goods are defective or otherwise break the sales contract.
Federal law does provide a “Cooling-Off Rule,” giving buyers three days to cancel purchases of $25 or more. Under this rule, the right to cancel for a full refund extends until midnight of the third business day after the sale. The rule applies to sales at the buyer's home or workplace, at facilities rented by the seller on a temporary basis, or at locations otherwise away from the seller's normal retail location.
Also, states have individual laws regarding consumer refunds. For example, New York State law does not generally require any retail merchant to have a specific refund, credit, or exchange policy. Specific refund policies can range from “100% money-back guarantees’ to “no refunds or exchanges whatsoever.” However, a store in New York is legally required to post its refund policy. If the store doesn't post any return policy, the law requires the store to accept returns within 30 days of purchase.
Setting Up a Refund Policy
The first step to setting up a system to handle returns and exchanges at your business is formalizing your policy so you can communicate it clearly to your customers. A written return policy allows you to treat all requests the same, and avoid handling returns on a case-by-case basis, which is often less productive and more expensive for your business.
Policies will vary depending on your business and the products you sell, but every policy should cover the following basics:
- What items can be returned
- What items can be exchanged
- What products are “final sale” (non-returnable, non-exchangeable)
- When things can be returned or exchanged (30-days post-purchase) • In what condition can items be returned (lightly worn, tags still on, etc.)
- What products can be returned for (store credit, refund, a product of equal value, etc.)
- How to initiate a return or exchange an email address to contact or a web page to visit
For example, here’s a return policy template offered by Shopify:
“If you’re looking to return or exchange your order for whatever reason, we're here to help! We offer free returns or exchanges within 30 days of receiving your order. You can return your product for store credit, a different product, or a refund to the original payment method.”
The Shopify policy recommends to note the following exceptions to a return and exchange policy:
- Discounted items are final and cannot be returned or exchanged
- Returned items must have tags still on and be returned in original packaging
- Returned items must have no visible signs of wear or use
Where to Post Your Return Policy
It is not enough to have a well-written return and exchange policy—you need to make sure your customers see the policy before they buy. When talking to a dissatisfied customer who is trying to return an item marked as final sale, telling them they should have read the policy will not resolve the issue. Nor will it give them a reason to buy from you again.
Include links to your policy in several easy to find places throughout your website to save time going back-and-forth with customers who did not see the policy. A few key places to list your policy include:
- Your website footer
- FAQ page
- Product page
- Shopping Cart
Establishing a clearly communicated returns and exchange policy is a must for any merchant. How you handle return requests outside of your policy is up to you.
Still have questions about how to craft your own return policy? Reach out to our CPP Certified Payment Professionals and ask for help.