Prevent Chargebacks With a Good Return Policy

When customers aren’t happy with a purchase, they have two options: they can choose to request a refund from the merchant, or they can file a chargeback with their card issuer. While customer dissatisfaction is not pleasant for any business owner, it’s inevitibility means that merchants should plan ahead to ensure that customers will ask for a refund rather than file a chargeback. Chargebacks frequently pile on extra fees, and in the case that you need to dispute one, it will be a time-consuming process and quite often will fall in the customer’s favor, even unfairly.

Merchants can prevent these disruptive chargebacks by having a customer-friendly return policy in place. Keep reading to learn how you can create a return policy that makes it easy for customers to reach out to you first when they’re dissatisfied with their purchase.

1. Be Flexible

You may be tempted to have a strict return policy because you’re worried about losing money. The truth, though, is that when your return policy is too strict it can actually cause more of a problem, because customers will feel that your policies are not fair and won’t have any hesitations about filing a chargeback. For example, the customer may know that you only process returns within 15 days of purchase, but because they feel this is not fair, they will file a chargeback to get their money back.

2. Set Fair Return Deadlines

Try to make your return deadlines as long as possible. Aim for no less than thirty days, but longer than that is ideal. If having a short returns deadline is out of the question for you, you can consider implementing longer deadlines just for certain types of refunds, such as those involving damaged or malfunctioning items. You can also incentivize customers to make returns sooner while still allowing later returns by offering cash refunds for returns made within two weeks, and after that point you can provide store credit.

Having longer return deadlines doesn’t just prevent your customers from filing chargebacks, but it also tells your shoppers that you care and want them to be happy with their purchase.

3. Consider Covering the Cost of Return Shipping

If you have a lot of online shoppers or ship out to customers, you’re bound to have a sizeable amount of mail returns. While it may seem like a costly investment, paying for return shipping is still likely to be cheaper than chargeback fees. Plus, offering free return shipping can actually increase your sales, since customers are more likely to buy knowing that if they need to, it’s easy to send the product back.

4. Educate Employees

You don’t want to risk having a customer filie a chargeback because the sales associate told them the wrong thing. Be sure that your employees are able to effectively communicate your return policy- customers will be happy with the transparency.

5. Make Your Return Policy Easy to Understand and Easy to Find

Your return policy should be clearly written or explained, and should touch upon any relevant details, such as:

  • Will the customer need to show the receipt?
  • What are the return deadlines?
  • How will the refund be credited?
  • Is shipping covered?

Use simple, concise language so customers will actually read it over and understand. For in-store purchases, have checkout clerks share the policy at checkout. For online purchases, put links to the return policy all throughout the checkout process, and you can even have customers ‘accept’ that they have read the policy before placing the order. You can also include the return policy once again in confirmation emails and receipts.


The best thing that any business owner can do is to anticipate that there will be customers who want a refund, and then make it easy for them to do so. Beyond saving you valuable time and money, implementing a fair return policy increases customer loyalty and trust, which can translate into more sales.