Returns and Refunds

Your returns policy can be a marketing tool. What could be better than a money-back guarantee? Millions of consumers confidently patronize certain online businesses — for example, Amazon, Land’s End, or REI — because these companies have customer-friendly, simple-to-use return policies. On the other hand, every consumer remembers an unpleasant experience trying to return something and probably stopped shopping at that business afterwards.

Not every business needs an unlimited return policy, but we do recommend that you establish a customer-friendly policy of some sort and that you communicate it to your customers.

Before you draft that policy, keep in mind the legal rules. You don’t have to give a refund unless either of the following is true:

  • You broke the sales contract — for example, your goods were defective.

  • You have a policy that allows a refund for returns.

If you want to provide refunds and impose conditions on when merchandise can be returned, post your return and refund policy prominently with your listing or at your store.

A typical policy might require the customer to return the merchandise within 30 days for a refund.

State rules on refunds. A few states have laws regarding refunds. It's not always clear whether these laws apply to online retailers doing business with residents of these states. California's law seems to apply to Internet transactions, because it applies to "other sellers of goods at retail, and mail order sellers which sell goods at retail in California …" New York's law is silent on the issue. So far, there have been no cases enforcing this issue, but if you prefer to err on the conservative side, then sellers dealing with residents of these states should consider abiding by the retail rules as follows: 

  • California. You must post your refund policy unless you offer a full cash refund or credit refund within seven days of purchase. If you don’t post your policy as required, the customer is entitled to return the goods for a full refund within 30 days of purchase.

  • Florida. If you do not offer refunds, that fact must be posted. If the statement isn’t posted, the customer can return unopened, unused goods within seven days of purchase.

  • New York. If you offer cash refunds, that policy must be posted, and you must give the refund within 20 days of purchase.

  • Virginia. If you don’t offer a full cash refund or credit within 20 days of purchase, you must post your policy.

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