Last updated on 16 August 2022 by William Blesch (Legal and data protection research writer at TermsFeed)
A No Return, No Refund Policy is a policy where customers are informed that they are not allowed to return or get refunds for products they have purchased.
This article will cover country-specific requirements and laws that stores must follow when implementing such a policy, and help you write your own that you can display on your ecommerce website.
Use our Return & Refund Policy Generator to generate a Return and Refund Policy for your store. Just follow these steps:
Enter an email address where you'd like to receive your Return and Refund Policy and click "Generate."
Done! You'll be able to instantly access and download your new Return and Refund Policy.
A No Return, No Refund Policy is simply a policy where customers are informed that they are not allowed to return or get refunds for products they have purchased.
Many businesses choose to institute a No Return, No Refund Policy to save themselves time and money. After all, if customers cannot return items, then the company does not need to process those returns or give the money back.
Typically, the text of these policies is prominently featured as a collection of clauses within a website's terms and conditions agreement. This is because it is an essential policy for customers to be aware of before they make a purchase.
Alternatively, some online stores create a separate page that explicitly details the company's policies on returns and refunds.
As you are probably aware, in countries where it's legal, many store owners choose to have one of these policies. This means that if customers change their minds about an item for whatever reason, they can't get their money back.
Of course, you can imagine how frustrating that might be.
However, it's even worse if those customers never even knew a store had a No Return, No Refund Policy in the first place. Perhaps there were no links placed in prominent areas, which pointed them to it, but for whatever reason, they didn't realize such a policy existed.
Worse still is when customers can't find your policy at all because you don't actually have one written.
While many consider it a best practice to have a policy that allows refunds and returns under specific conditions, the truth is that both cost a business time and money.
If you believe that a policy that allows no returns and no refunds is in your business's best interests, then read on to learn the do's and don'ts, the pros and cons, see examples, and discover how you can best create yours.
Of course, you wouldn't be reading this if you didn't have an inkling about what a No Return, No Refund Policy is. However, we think it makes sense to provide a quick overview just in case.
Consumer laws governing these policies differs depending on what geographic area you're operating in. Different countries and U.S. states have different laws and requirements that you'll need to be aware of.
Note that if your business is located in Australia, you should know straight away that it's against the law to have a policy that doesn't allow returns or refunds. It's simply not allowed by Australian Consumer Law. However, many other countries do allow this type of policy.
Let's look at a few different areas and their relevant laws/requirements.
No Return, No Refund Policies are prohibited in Australia. This law is in place to make sure that consumers are protected in the event that they are not satisfied with a purchase. If a business owner violates this law, they can face fines and other penalties.
Businesses in Canada are allowed to have No Return, No Refund Policies, according to the Canadian government.
Companies in the United Kingdom are compelled by law to issue refunds and accept returns from customers, regardless of the item's sale status or the reason for the return if the request for a refund occurs during the first 14 days following a purchase. The customer has another 14 days to make a return after notifying the business.
Because there are no federal laws for refunds, it is up to individual states and companies to set their own policies. Businesses should be mindful of the refund policies they set.
For example, in some cases, not conspicuously displaying a "no refunds" sign can mean customers have a right to a refund even when the business has otherwise said they do not provide them.
A best practice here is to check your US state's return and refund laws.
In general, regardless of location, you'll find that there may be specific rules governing a few different types of products and services when it comes to refunds and returns.
We'll discuss a few briefly here.
If you sell digital products, such as a mobile app, you should remember that these are products that your customers will only purchase once in many cases.
You might sell other digital products such as templates, eBooks, videos, and more that customers can download from your website.
You might agree that it's logical to have a no refund policy for digital products. First, there's no way for a customer to return the product to you, and secondly, they might have shared these products with friends and family following the purchase.
All those other people then have copies of your product, too. Imagine all these people with copies, and a month later, the person who made the original purchase asks for a refund. Totally not cool (or economically sustainable).
Still, there are specific rules you'll need to follow if your customers are located in the UK or EU, regardless of what digital product you sell.
As previously mentioned, the UK allows consumers to request a refund within 14 days of purchase. During that time, consumers can cancel purchases and ask for refunds for any reason. The UK and EU call this a "cooling off period."
An exception to the above is when a digital product, such as an app, has begun working or the consumer has begun using the digital content.
Outside the EU and the UK, most digital product purchases are final. In other countries, most companies do not allow refunds unless there's a technical issue or another "valid" reason for the refund request.
Here's an example from the Spark mail app. As you can see, all service fees already paid are not refundable:
Most companies that sell food or other perishable products don't allow returns or refunds once a purchase has been made.
Obviously, online stores cannot accept returns on food products that have been shipped to a customer, and they certainly cannot resell them. Companies would violate all kinds of health and safety regulations by doing so.
Moreover, requiring such businesses to accept returns and provide refunds would literally ruin them. Therefore, No Return, No Refund Policies are more common amongst companies that sell these types of products.
Because subscribers will usually have already benefited from the service to which they subscribed, businesses typically won't provide a refund for the months the customers have already used the service. Typically, this includes the current month and billing period. Companies that bill for services on an annual basis often choose a no refund model as well.
As a business owner, you know that not all products and services will be a perfect fit for every customer. That's why many businesses offer a trial period or refund policy so customers can decide if the product is right for them during a certain period of time.
However, businesses are increasingly moving to a subscription-based model with no refund policy. This is particularly common when customers are billed monthly.
Customers can usually cancel memberships before the yearly billing cycle renews itself, but they can't recoup the cost of any months during which they used the service.
Suppose you have a subscription-based service and you want to use a no refund model. In that case, it's a best practice to ensure that before purchase, your customers are aware of that policy and that it is their responsibility to cancel an unwanted subscription.
Here's how Netflix, one of the top subscription-based streaming platforms, does it:
Now you know more about the rules of these policies. So let's take a look at the practical benefits for your business of having one in place.
There are a number of benefits of having this type of policy in place for your online store including getting to keep more of your earnings, reducing fraud, and having more control over when you accept returns and issue refunds.
As long as it's legal, it can make sense under certain circumstances.
At the same time, there are also a few downsides. Below, we'll go over both.
You've worked hard to gain your customers' trust, loyalty, and cash. Giving them a refund should be an option, not a requirement, right? With a No Return, No Refund Policy, you don't have to give any of that hard-earned money back. That's a win for your bottom line.
A strict No Return, No Refund Policy can help reduce fraud and chargebacks, which is another win for your bottom line.
Most people are honest and don't take advantage of lenient refund policies, but it is crucial to be prepared for the possibility that they might. The cost of chargebacks can add up quickly. The time spent on processing refunds plus the expense of paying a credit card company $2.40 each instance could make or break your business in today's digital age.
When a business implements a No Return, No Refund Policy, it can be selective and allow returns and refunds for some products but not for others.
As already discussed, many companies don't provide refunds for digital products or subscription-based services. That's a bit harder to justify with physical products, and so some companies may choose to implement a no return policy only for products purchased on clearance (for example).
Some customers may not be able to use the product or service as intended and will therefore want to return it. If they can't do that and can't get their money back either, it could lead to negative word-of-mouth. Additionally, your overall conversion rates might suffer, resulting in lower sales.
While there are obvious benefits that your business can realize by having a No Return, No Refund Policy, there can also be disadvantages.
Revelry has a return and refund policy clause that's quite basic but also very clear. It reserves the right to refuse returns and makes it known that each return request is considered on a case by case basis:
While this may work for some boutique-type companies, it may be a lot to keep up with, to review each return request on such a case by case basis. But if it would work for you, it's a good way to maintain a high level of control over your returns accepted and refunds issued.
Body Bliss has a strict no return, no refund policy as you can see below:
Autograph Foliages has a policy that allows returns, but not refunds. Instead, it offers in-store credit, less any restocking fees:
Solo Stove allows returns and refunds as well as a pre-paid return label for orders placed in the lower 48 states of the U.S., but outside of this area or when purchased from third-party vendors, orders are not eligible for return:
Now let's look at how you can go about creating your own No Return, No Refund Policy to display to your customers and potential customers.
The first step is to make sure that you are compliant with the law. Write your policy in a way that's straightforward and in plain language.
As mentioned earlier, certain locations have laws requiring businesses to offer a refund or exchange on certain types of items.
Once you're sure that you can legally institute a No Return, No Refunds Policy, there are some guidelines to follow.
You should ensure that your policy is written in a manner that's as upfront and straightforward as possible. You want potential customers to understand your policy easily.
With that in mind, your policy should lay out your expectations and answer critical questions like:
If you're not comfortable with a No Return, No Refund Policy, you could consider other options such as:
Each business will have different needs and preferences, so it's essential to think about what will work best for you.
When you're writing a No Return, No Refund Policy, it's essential to use clear and concise language so that everyone understands what's expected of them. This includes your customers.
If you use complicated legal jargon or terms that people might not know, they may not understand the policy. Misunderstandings could occur, and that confusion might end up harming your business relationship.
Remember that you want your customers to understand your policy easily.
To ensure your No Return, No Refund Policy is easy to access, you should place links to it in your website's footer, on your checkout page, FAQ page, and you may wish to include it within your terms and conditions agreement as well.
Let's suppose you have a customer who starts disputing charges with their bank after purchasing from your store and let's say they did it because they had no idea you had a No Return, No Refund Policy before they made the purchase.
On the other hand, if your No Return, No Refund Policy is easily accessible and visible on your website, you can reduce the chances of a customer engaging in unwarranted chargebacks.
Here's how Solo Stove makes its Return Portal and Returns Policy accessible from its website footer:
When it comes to refunds, businesses need to find a balance between what makes sense for them and what is fair for their customers. A No Return, No Refund Policy can be successful when it's well thought out and appropriately communicated to employees and shoppers alike.
Remember that while you may wish to continually improve your bottom line (and a No Return, No Refund Policy can undoubtedly save you money), your customers are thinking about their bottom line, too.
It's tempting to implement a policy that cuts returns and refunds to keep profits high, but doing so at the expense of customer experience can hurt your business in the long run.
Finally, keep in mind that the legality of a No Return, No Refund Policy depends a great deal on where you're doing business. Additionally, even when such a policy is legal, there may still be regulations that apply.
This article is not a substitute for professional legal advice. This article does not create an attorney-client relationship, nor is it a solicitation to offer legal advice.
16 August 2022