When refunds are legally required (and when you can say no)
PLUS, THREE THINGS THAT SHOULD BE IN YOUR REFUND POLICY
Have you ever gone to return something on Amazon, you submit the request, and then… oops… you didn’t send the thing back in time?
(That has definitely never happened to me. Definitely.)
Amazon is pretty clear about the refund policies for each listing and the guardrails around making those returns.
But what about your business?
When are refunds legally required, and what are the differences between the legal requirements for refunds when it comes to physical items, digital products, and services?
That’s what I’m talking about today. That, the one non-negotiable when it comes to refunds, and the three things your refund policy should cover.
What the law actually says about refunds
Knowing the refund rules is so important because nobody likes a surprise chargeback. But the rules are a tiny bit different depending on what you’re selling — physical items, digital products, or services.
Physical Items
The feds say that refunds are legally required:when a product is defective, meaning it has a significant problem with its safety or functionality.
Without getting too deep into the nitty gritty of the law and things like the “commercial code,” physical products have to meet basic standards. Things like making sure they’re suitable for their intended purposes.
For physical items, refunds are required when::
1.The item is defective or dangerous
In other words, there’s a safety issue — something is faulty or could hurt someone. Or,
2. There’s a problem with the item’s functionality.
3. The product isn’t fit for its intended use.
Digital Products
With digital products, we’re talking about things like templates, downloads, and files.
Refunds might be legally required on digital products if:
1. You didn’t deliver the digital product; or
2. The digital product you delivered didn’t match the description. Things like price, contents, color, etc.(Insinuating your digital product will fix a problem or change someone’s life? Yep, that counts — and that’s why disclaimers are so important.)
Services
Services are a whole different beast.
If you’re selling strategy sessions, healing services, design work, or other services, refunds might be required if:
1.You didn’t provide what you promised to provide;
2. You terminated without providing proper notice to the client; or
3.You misrepresented your services. (Again, tread lightly with those guarantees and testimonials!)
The one non-negotiable when it comes to refunds — regardless of the state where you’re located
I’m going to cut to the chase. In a lot of states, if someone requests a refund? Your refund policy governs what happens next.
In fact, 14 states currently say “Hey, if you don’t offer refunds, you have to clearly say so at the point of sale.” Think: checkout pages, proposals, and contract terms. (And included in those 14 states are biggies like California, NY, and Florida.)
So that non-negotiable? 🚨 Post your refund policy. Conspicuously.🚨 In fact, ideally, someone should have to sign or check a box to agree to that policy before buying.
What your refund policy should cover
Just like a solid contract, a good refund policy just makes sure everyone is on the same page. It sets expectations (ahem, boundaries — thanks, Amazon) on when and how refunds are handled.
Your refund policy should cover:
1. Whether you provide refunds. (If not, remember what those 14 states require.)
2. The exact qualifications someone has to meet to be entitled to a refund.
For physical items, this might be things like “Product unopened/unused condition.” For digital products, maybe you establish a certain window — like 12 hours from the time of purchase — where they can request a refund; or if the buyer can show she completed all course modules and is still dissatisfied.
3. How the refund will be issued. Full refund? Partial? Store credit? Is there a restocking fee?
Need help writing your refund policy?
That’s exactly why I created The Refund Policy Oracle—a quick, mess-up-proof tool that generates a refund clause (written by yours truly) that’s customized to your business.
And it’s mess-up-proof — like all of the magical contracts in The Legal Apothecary. (Oh and it’s free.)
Whether you sell digital downloads, coaching sessions, reiki training courses, or ethically-sourced crystals, the Oracle will help you create a crystal clear refund policy and stay legally protected.