How to define your returns and refunds policy

Your returns and refunds policy is a crucial document that is both a legal requirement and a powerful tool for building customer trust. To get started, you need to understand two key pieces of UK law: the Consumer Rights Act 2015, which covers faulty goods, and the Consumer Contracts Regulations 2013, which gives customers a 'cooling-off' period for online sales. At a minimum, customers have a 30-day right to a full refund for faulty goods, and a 14-day right to change their mind and get a refund for items bought online.

Understanding Your Legal Obligations

In the UK, consumer rights are very strong. Your policy must, at the very least, reflect the statutory rights your customers have. Trying to offer less than what the law requires is illegal.

The Consumer Rights Act 2015: When Goods are Faulty

This is the most important law covering the quality of goods you sell. It states that products must be of satisfactory quality, fit for purpose, and as described. If they aren't, your customer has rights.

• The 30-Day Right to Reject: If a product is faulty, the customer has a legal right to a full refund within 30 days of purchase. They do not have to accept a repair or a replacement.
• After 30 Days: If a fault appears after 30 days (but within six months), you must first be given a chance to repair or replace the item. If the repair fails, or a replacement isn't possible, the customer can then claim a full or partial refund.

The Consumer Contracts Regulations 2013: The 'Cooling-Off' Period

This law applies to sales made at a distance, such as online, over the phone, or by mail order. It gives customers the right to change their mind for any reason.

• 14-Day Cooling-Off Period: A customer has the right to cancel their order from the moment they place it until 14 days from the day they receive their goods.
• 14 Days to Return: After notifying you they wish to cancel, the customer has another 14 days to return the goods to you.
• Refunds: You must issue a refund within 14 days of receiving the goods back. You should refund the basic cost of the original delivery, but you don't have to cover the cost of any premium shipping options (like next-day delivery).
• Exceptions: This right to cancel does not apply to certain items, such as personalised or custom-made products, perishable goods (like fresh food or flowers), or items sealed for health or hygiene reasons that have been unsealed (like earrings).

Writing Your Policy: Key Decisions to Make

Once you understand the legal minimums, you can build your policy. A clear, fair, and easy-to-understand policy can turn a potentially negative experience into a positive one, encouraging repeat business.

1. What will you offer: Refund, Exchange, or Credit? For faulty goods within 30 days, you must offer a refund. For online returns where a customer has changed their mind, you must also offer a refund. For in-store purchases where the customer has simply changed their mind, you are not legally required to offer anything, but most shops do as a gesture of goodwill. In this case, you can choose to offer a refund, an exchange, or a credit note.
2. Who pays for return postage? If an item is faulty, you (the seller) must pay for the return postage. If a customer is returning an item during their 14-day cooling-off period because they've changed their mind, the customer is responsible for the return postage cost, unless your policy says otherwise. Offering free returns can be a great selling point.
3. What is your timeframe for returns? The legal minimum for online returns is 14 days, but many successful businesses offer a more generous 28 or 30-day period for all non-faulty returns. This gives customers extra confidence when buying from you.
4. How do you handle damaged or used returns? For a 'change of mind' return, you can make a deduction from the refund if the customer has handled the goods in a way that diminishes their value. For example, if they've worn shoes outside rather than just trying them on indoors.

How to Present Your Policy

Your policy is useless if customers can't find it. It should be written in plain English, avoiding legal jargon.

• Be Clear and Concise: Use headings and bullet points to make the policy easy to scan.
• State the Process: Clearly explain the steps a customer needs to take to make a return (e.g., "Email us at [email protected] with your order number to start the process").
• Make it Visible: Place a clear link to your Returns & Refunds Policy in the footer of your website, on product pages, and in the order confirmation email. For a physical shop, have a notice clearly displayed at the till.

Quick Reference: Customer Rights at a Glance

Use this table as a simple guide to the legal minimums.

Situation	Customer's Right	Legal Timescale
Goods are faulty (in-store or online)	Full refund	Within 30 days of purchase
Customer changes their mind (online/distance sale)	Full refund	Notify you within 14 days of receiving goods
Customer changes their mind (in-store sale)	No legal right to a refund	Depends on your store's goodwill policy

Top Tip: A generous and simple returns policy is one of the best marketing tools for a new business. It removes risk for the customer and shows that you are confident in the quality of your products.