Selling or buying online, you’ve probably read the sentence “money-back guarantee”. But what exactly does it mean, and why should you care about it?
In this post, we’ll explore what a money-back guarantee is, look at examples, discuss whether you need to include one in your Terms and Conditions, and walk you through how to write a money-back guarantee clause.
A money-back guarantee is a promise that a customer will receive a full refund if they aren’t satisfied with a product or service, typically within a specific period. This guarantee helps build trust with customers, as it assures them they can get their money back if they aren’t happy with their purchase.
While it may seem risky, having a money-back guarantee is actually a good way to boost conversions. Your customers will be less hesitant to buy – because they know they can get their money back – and you show confidence in the quality of your products or services.
Usually, a money-back guarantee clause varies depending on the timeframe in which customers can ask for a refund. The most common clauses are:
Many businesses have a money-back guarantee clause.
One example is eBay. eBay offers a money-back guarantee to customers who purchase items from certain sellers on their platform. If a buyer doesn’t receive the item, or it doesn’t match the description provided by the seller, eBay will refund the full purchase price, including original shipping costs. This guarantee offers peace of mind to eBay shoppers, encouraging them to make purchases with confidence, knowing they won’t lose money if something goes wrong.
At iubenda, we also have a money-back guarantee in our Terms and Conditions document. It allows our customers to receive a full refund within 14 days of their purchase, no questions asked.
A money-back guarantee clause is not legally required. As an e-commerce owner, you can choose whether to have it or not. However, under many consumer laws, customers are granted the right of withdrawal, which includes getting a full refund of the purchase.
While the two aren’t the same thing, they share some similarities.
Let’s have a closer look.
In the European Union and UK, users have the right to return purchases made online or through other types of distance selling, within 14 days for a full refund – even when the goods are not faulty. They don’t have to give any reason.
Usually, in the EU and UK consumers have to pay for the return shipping costs, but this is something you must inform them about before the purchase.
In the EU, the right of withdrawal can go from 14 days to 1 year and 14 days if users are not informed of their rights to return the products they buy. Remember to always have a valid Terms and Conditions document on your store and have your users accept it.
In the US, there is one law that regulates refunds on a federal level. It’s called the Cooling Off Rule and it gives customers 3 days to cancel orders made in specific locations – such as their home, workplace, a temporary location and more. However, this rule doesn’t apply to purchases made online.
Generally, laws surrounding refunds can vary by state. However, a 30-day return policy is often considered standard and, if no refund notice was presented during purchase, consumers might be automatically granted extended refund rights.
👉 Learn more about returns and refunds in our dedicated guide!
Writing a money-back guarantee clause can be challenging if you don’t know where to start and don’t have legal expertise. However, there are some elements that you should always include:
A money-back guarantee clause might look something like this:
“We offer a 14-day money-back guarantee on all our products. If you are not satisfied with your purchase, we will issue a full refund within 14 days, including the shipping costs, using the same payment method as the original transaction. This guarantee does not apply to personalized items.”
As we said, having a money-back guarantee is a business advantage and you want your customers to be aware of it.
Here are a few spots where you should add your guarantee:
A money-back guarantee is a great tool for your business to increase trust and improve customer satisfaction, because you show customers that you stand behind your products and are committed to providing excellent service.
However, a money-back guarantee alone is not enough.
If you sell online, you need to have proper Terms and Conditions in place, specifying all the applicable conditions of sale, such as shipping costs, payment methods, warranties, and more.
iubenda helps you create a complete Terms and Conditions document for your online store.
Choose from a library of +100 clauses drafted by legal experts, translate your document into +15 languages, and add it to your website in just a few clicks!
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