Should Online Businesses Offer UNCONDITIONAL REFUNDS?

Look, i’m not saying that having a generous Refund Policy doesn’t have its place.

But i disagree with the idea in general.

People are dishonest. It’s true.

If you want proof, consider that most people speed when there are no speed-cameras or cops around to catch them. Morality is an artificial human-manufactured concept. It goes against our very nature.

Give someone just the right level of temptation and remove their risk of being caught, and everyone’s morality will be tested.

Put someone in a “my life or yours” situation, and rules of the jungle apply.

Create a famine, a riot, or any kind of scarcity and people will turn on each other, loot their neighbours, and kill to stay alive.


So why should it be any different in the digital business world?

After all, nothing is easier than to buy a product, download it, then take advantage of the refund policy and get all your money back.

In retail, games, software, movies, cds, and dvds have a very different and much more limited return policy from everything else.

Should we, as sellers of digital products do the same?

Or should we go on offering UNLIMITED and UNCONDITIONAL refunds like the norm?

Let me say this — from a marketing perspective, a generous refund policy may very well increase sales. After all, it’s the easiest way to eliminate risk.

But a really brilliant marketer knows how to eliminate risk without opening themselves up to being cheated.


They Are Reluctant to Give Refunds Anyway

MOST online business owners are SO RELUCTANT to give refunds.

And for good reason!

It’s obviously not profitable to have to return a sale you earned. But worse, they often cannot recover money paid out to affiliates and JV partners. So they don’t just lose the sale–the refunded sale costs them, out of pocket, as much as HALF the sale price.

Of course, too, it is their intellectual property in those products. Which when the product is good and expensive, it is often pirated, copied, and spread via rapidshare and torrents for others to download freely!

So they ALWAYS warn their customers about being habitual refunders. They even try to indoctrinate their customer to believe that asking for refunds is a sure sign of being a loser.

My opinion?


Overly generous Refund Policies invite dishonesty.

And if you’re reluctant to return people’s money anyway, why pretend to be generous about it?

Let’s also face facts.

Particularly if you sell in the “get rich online” industry ( or any of the other generally “frowned upon” industries like adult entertainment, gambling, etc ), you’re dealing with customers who have a tendency to be unethical.


Come on, hear me out. Don’t get mad.

What tiny newbie affiliate didn’t at some point review a product they never owned and raved about how amazing it was?

What Network Marketer didn’t, in frustration, try to act like they were making a gazillion dollars from their business and claimed to have quit their job?

Come on. Come on. Let’s not bullshit ourselves.

If your customer is capable and willing to “white lie”, they will think little of Intellectual Property theft. After all, what is intellectual property? It’s ONLY someone’s ideas, right?

Would you like to reward these kind of people for their dishonesty?

On the other hand, there is the “good guy” who has a genuine need for a refund.

Like, err…i don’t know…the product was broken.

There were worms in the package.

The CD was scratched.

Those are good reasons. Really they are. But usually the customer wants a replacement not a refund.


Can you think of another genuine reason your customer might give for a refund?

How about:

  • “I didn’t use the information because my dog got cancer and i’ve been busy with that”
  • “I didn’t have time to go through the information and i don’t think i ever will”
  • “I am no longer interested in this information”
  • “It just was not for me”
  • “I thought the course would be about XYZ but it turned out to be about ZYX.”

err…don’t those sound an awful lot like SOMEONE (not mentioning any names) should have been more careful about their decision to buy?


What do you think – Should digital businesses still offer UNCONDITIONAL REFUNDS?

If your product is intellectual property, information, and ideas…

…Is it YOUR responsibility to let a customer change their mind – or –

……Is it the customer’s responsibility to exercise more care when buying?

Click an answer below…

[POLLANSWER shortlabel=Yes longlabel=Yes to Refunds!]Yes! Refund them.[/POLLANSWER]
[POLLANSWER shortlabel=No longlabel=No to Refunds!]No Refunds![/POLLANSWER][/POLL]

Jim Yaghi

Jim Yaghi

Foremost Home Business traffic expert, Jim Yaghi is a Computer Scientist and Mathematician who used to build search engines for a living. At 16 he created a mildly popular social network and has been an online entrepreneur for over 15 years. In 2006 he rose to the #1 Affiliate rank in many Home Business programs (most notably Magnetic Sponsoring). Today he's best known for hatching the first industry-wide viral campaign to reach all major social networks, for hosting a top-10 Internet radio show for entrepreneurs, and for shattering industry sales records with his best-selling, easy-to-follow online marketing courses PPC Domination, PPC Supremacy, and Traffic KickStart.

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