Three Legal Reasons Why Your Online Business in the UK Should Action Refunds

Handling customers demanding refunds can be a tricky part of running an online business. On the one hand, you do not have physical sight of any alleged defect. On the other hand, you have a disappointed customer who seeks a swift return of their purchase monies. This article will explore three critical reasons why your UK online business should take refunds in certain circumstances, and examine the merits of an effective refund policy.

How Common are Refund Requests?

Traditionally, refunds were more commonplace in physical stores than in online businesses. However, more recently, consumers are becoming savvier about their rights and expect UK online companies to process refunds equally effectively.

Most UK online retailers will have a written refunds policy, otherwise known as a returns policy, to detail the circumstances in which a customer may qualify for a refund. Some companies are keen to try and fix or replace the item before processing refunds, but much can depend on the consumer’s attitude and the item’s value.

Let us consider three significant reasons for your UK online business to operate an effective refunds policy.

1. Ensuring Legal Compliance

Having customers request refunds following the delivery of items is part and parcel of running an online business. UK consumers tend to ask for refunds for three main reasons:

1. the item is broken;
2. they have changed their mind; or
3. the item is in poor condition (for example, a book arrives with a bent spine).

There are two main types of consumer rights covering this situation in the UK. The first concerns situations involving faulty goods. In these circumstances, your business has the following options:

• it can attempt to repair or replace the item within 30 days; or
• if this is not possible, it must refund the consumer.

However, our law allows consumers to change their minds about online purchases. In this way, if a consumer changes their mind within the 14-day period following their purchase, your online business should refund their monies. This is the case even if the item is not faulty.

There are some potential exemptions to this 14-day refund period, however. These include situations where the item cannot be resold once returned (such as underwear items or sealed toiletries). Your refund policy may also be able to deduct the cost of return shipping from any refund, albeit this may reduce customer satisfaction.

2. Good Customer Service

UK consumers expect online companies to work hard for their hard-earned money and customer loyalty. If you offer reasonable refund terms (and free returns), you will give customers peace of mind during these unpredictable times. In fact, consumers who have received swift refunds with no hassle are more likely to return to your business and buy more expensive products in the future.

3. Attracts New Customers

Attracting potential customers is one of the biggest current challenges for UK online businesses at the moment.

One of the first things many prospective consumers will do is check whether the website has a return policy and read through it. This is because they will want the security of knowing they can quickly return the item and replace it or receive a refund if it is not perfect.

With this in mind, having a straightforward, reasonable refund policy on your website is essential. Whilst these policies will differ, they usually act to confirm some of the following:

• situations in which a refund or partial refund is possible;
• whether you offer free return shipping within your return process;
• any exemptions to item refunds or refunds (such as items not being within original packaging or being unhygienic to return, such as underwear items);
• scenarios in which your business would offer a replacement rather than a refund; and
• a description of the evidence required to process returns or refund requests (for example, the sending of photographic or video evidence).

Dealing with refund requests is an inevitable part of online business, so it is essential to have a robust refund policy in place to provide security to customers and your company.

Key Takeaways

Handling refunds and returns requests are part of any online company’s business plan. There is a tricky balance between satisfying customers and your legal requirements whilst limiting refunds to a reasonable level. Part of this balance can be found through the drafting of a suitable refund policy. For this reason, many online business owners in the UK obtain specialist legal assistance.

If you need help putting a Refund Policy in place for your online business, our experienced ecommerce and online business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page. 

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