How do you say you have a chargeback problem without saying you have a chargeback problem? One red flag we see all the time with merchants is a “No Refunds” policy. If you have a no-returns policy or your policy is hidden to discourage returns, you’re actually encouraging chargebacks, not preventing them. If a cardholder is seeking a refund or return, and you don’t have an accessible means for them to get it, they can go to their bank and get that refund with a chargeback. Returns are expensive, but chargebacks cost even more, so you do need a sensible and visible returns policy.

It’s understandable that some merchants are apprehensive about returns and prefer to avoid them; they do present significant challenges to your bottom line. Obviously, there’s the cost of shipping, restocking and the loss of a sale. Returns can also be abused by bad actors. Schemes like “wardrobing” and “bracketing” can exacerbate the cost of returns. Accessible returns policies can also beget more returns as customers become aware of their options.


These challenges certainly pose credible threats to profits. But let’s weigh them against the equally legit benefits that a good returns policy can provide, and consider what is best for your business. The benefits of a successful returns policy extend beyond merely avoiding chargebacks:

  1. 100% of returns come from existing customers. The silver lining of a return is that your marketing investment paid off; you were able to convert a shopper into a customer. Compare the cost of retention to acquisition. The cost of an existing customer’s return is almost always lower than what you’ll spend to replace them.
  2. Positive returns make loyal customers. When that existing customer has a hassle-free return experience, they’ll come back to you and not your competitors. If retention and up-sells are key performance indicators for you, returns are an integral strategy to reduce attrition.
  3. Returns and guarantees can actually incentivize sales. Consumers will convert if they’re confident you’ll take care of them. Incentives like money-back guarantees, or free shipping on returns put the consumer at ease. Good returns policies essentially bake your customer’s satisfaction into the deal.

Studies have shown time and again that while returns may increase, good returns policies actually generate more sales and revenue. In order to realize these benefits, your returns policy needs a good strategy. It should be well thought out, well-executed, and guided by ongoing analysis.


There are four key components to a sound strategy for returns: simplicity, visibility, flexibility and opportunity. Build these into your policy to put “returns” into your return on investment.


Spell your policy out in clear, concise language — and avoid fine print. Ensure that your customers can easily understand exactly what can and can’t be returned, and set their expectations for the process. Likewise, your product descriptions and presentations should be accurate and easy to understand, so you’re not facing unnecessary “product not as described” returns.


Let your customers know you have a returns policy, so they come to you with any issues. Make sure they see it during checkout. Include it in your confirmation email or print it on their receipts. You should also have the policy somewhere prominent on your website, for consumers looking for that added satisfaction guarantee.


Competition is stiff in the world of returns. Market dominators like Amazon and Zappos have set consumer expectations very high, making it ridiculously easy to return products. Then, you also have chargebacks to contend with, where your customers can simply get a refund from their banks. So be as flexible as possible. Allow a generous return window that gives you an edge against these competitors.


Returns should also be informative. Problems with orders can tell you where you need to improve. Similar returns can reveal routine mistakes. In addition to learning opportunities, you can also use them to up-sell or cross-sell other items in your inventory. Returns can be a qualifier to target leads for promotions and discounts.


Returns policies are more than just something you must have as a merchant, they are a key performance indicator. Deployed properly, they can be a sales and marketing tool that can actually increase sales and reduce attrition. A simple, visible and flexible returns policy will bolster customer loyalty and provide you with valuable opportunity metrics to optimize your business.

Furthermore, a good returns policy is just one effective tool for reducing chargebacks. ChargebackHelp urges merchants to take necessary steps like these to keep chargebacks to a minimum. We can help provide insights into merchant services and transaction fundamentals to best protect your processing. We also provide a free analysis on how your business can manage disputes to preserve and recover revenue from chargebacks and fraud. Contact a ChargebackHelp specialist today and get a demonstration of how to reduce your chargeback pain point. a href=”mailto:[email protected]”>Shoot us an email, call us at 1.800.975.9905, or contact us here.