We are now in the heart of the 2014 Holiday Season, and the Internet has changed the way we do business forever. I started out in business in 1983, long before “Cyber Monday” ever existed. But the concept of a Money Back Guarantee has been around for ages. And if you run an eCommerce store like 60,000+ of our clients, you might find today’s blog worth a read. Also: Are you old enough to remember what a Bozo No-No is?
A money-back guarantee, also known as a satisfaction guarantee, is essentially a simple guarantee that, if a buyer is not satisfied with a product or service, a refund will be made.
The 18th century entrepreneur Josiah Wedgwood pioneered many of the marketing strategies used today, including the satisfaction-or-money-back guarantee on the entire range of his pottery products. He took advantage of his guarantee offer to send his products to rich clientele across Europe unsolicited. The money-back guarantee was also a major tool of early U.S. mail order sales pioneers in the United States such as Richard Sears and Powel Crosley Jr. to win the confidence of consumers.
The use of money back guarantees has grown significantly over the last few years and has become standard practice in marketing across all media. Very often, unreliable businesses use it as a tact to reel the customer into a false sense of safety. Many guarantees by sellers often fall outside the allowed scope of their merchant agreements with their banks. For example, Visa and MasterCard explicitly bar the seller from offering a money-back guarantee past 90 days from purchase.
Issues relating to false guarantees have become so common that the Federal Trade Commission has specifically addressed the issue in the Code of Federal Regulations Handbook (§ 239.1).
Your product or service could be compelling, your price amazing, and your sales letter "hypnotic" ... but if a satisfaction guarantee looks shady, your prospects are out the door - or off your website!
The wording, the structure, and the terms of your guarantee can make or break the sale, and are a direct reflection on you and your company. What is your money back guarantee saying about YOU?
Bozo NO-NO #1: Putting important clauses in parentheses, or burying them in the copy.
Watch what terms you put in parentheses. Even innocent clauses referred to in this way can give your prospect a feeling of underlying "shadiness." For instance, you might say:
"If you're not overjoyed with XYZ Hair Care Product, simply return it within 90 days (with all of the stay fresh seals intact, all jars unopened, with original packaging, and in resalable condition), and we'll refund 100% of your money with no hassle!"
No hassle, eh? Could've fooled me. This guarantee sounds like the merchant is trying to pull a fast one on the consumer. It gives off that "Oh yeah, by the way, this isn't really that important, but I just thought I should mention it, I hope you don't mind..." vibe that screams "scam alert!"
Be up-front about the terms of your guarantee, and you'll reduce refund and return disputes later on down the line.
Bozo NO-NO #2: Offering the bare minimum guarantee term.
30 days appears to be our industry standard for the minimum term of a guarantee, although I've seen a 15 day money-back guarantee before (on a shoddy product).
Offering such a short-term guarantee can make prospects feel that you're afraid they'll realize your product is worthless given sufficient time to try it out. For instance, the 15-day guarantee I saw above made ME think that the merchant was hoping customers would realize the poor quality of the product AFTER the guarantee term was over, and/or forget to ask for a refund in time.
Also -- especially with information products -- some people may buy immediately, and not USE (or read) the product until AFTER the covered 30-day period. Why? They may not have the time, and are simply trying to purchase before a possible price increase.
I've put off purchasing products with 30-day guarantees quite a few times, as I wouldn't have been able to read them within the first month that the guarantee covered. Then, I forgot to go back and order the product, (or decided I didn't really need it after all), and the merchant lost that sale.
The moral? Reward impulse shoppers! Don't have your guarantee, of all things, give them a reason not to buy your product right away. If you're like most Internet merchants, you already have a hard enough time convincing a good percentage of your prospects to buy.
Bozo NO-NO #3: Putting ambiguous clauses in your guarantee.
I ran across a website that assured me that, with their service, my success was "almost guaranteed" but your experience might vary.
Whaaat? Seem a little off to you?
I know there's a high "duh" factor in this one, but it must not have been as obvious to this clueless merchant.
We as business owners can get so caught up in trying to protect ourselves in our guarantees that we forget to take a step back and actually LOOK at what we're saying. My advice? This merchant should focus on what they CAN guarantee, and throw those iffy, credibility-killing clauses out the window.
I'm Telling On YOU!
Here is a summary of what the U.S. requires when offering guarantees (referred to as "warranties" below) on consumer products. (International readers, please investigate these in your own locality.)
TIP: The info below only applies to you if you're selling CONSUMER products -- not commercial -- and applies to written (not oral) warranties.
Warranties are your promise, as a merchant, to stand behind your product. The law recognizes two types of warranties: implied and express. There are also two types of implied warranties.
For more information and examples of these terms, see The Federal Trade Commission's (FTC's) "Understanding Warranties" article at:
The FTC applies the following requirements to businesses who choose to offer a written warranty (but offering one isn't required). There are three rules companies must follow when offering written warranties on consumer products over $10-$15 (the rule being adhered to is dependent upon the price of the product.)
The FTC's Rule on Pre-Sale Availability of Written Warranty Terms requires that written warranties on consumer products costing more than $15 be available to consumers BEFORE they buy. The rule has provisions that specify what retailers, including mail order (*this category includes Internet purchases*), catalog, and door-to-door sellers, must do to accomplish this. For details see:
There are NO time limitations on implied warranties, (which are automatically required and enforced by the government at the point of sale). However, the state statutes of limitations for breach of either an express OR implied warranty are generally four years from the date of purchase.
This means that buyers have four years in which to discover and seek a remedy for problems that were present in the product *at the time it was sold.* Obviously, this doesn't cover damage due to misuse, natural wear and tear, etc. It simply states that the product must do what it was intended to do for the average "life" of the product.
If you choose not to offer a written warranty, the law in most states allows you to avoid an implied warranty for that product. In order to do that, you need to make it perfectly clear to your customers, (in writing), that you won't be responsible if the product malfunctions or is defective. You must *specifically indicate* that you don't warrant "merchantability" (see the definition above), or specify that you're selling the product "with all faults," or "as is."
TIP: If you offer a written warranty for a product, you MUST also offer implied warranties on the product.
A few states have special laws on how you need to phrase an "as is" clause, while other states don't allow the sale of "as is" consumer products at all. (For specific information on how your state treats "as is" disclosures, consult your attorney.)
TIP: You can't avoid responsibility for personal injury caused by a defect in your product, even if you sell it "as is." If it proves to be defective or dangerous, causing personal injury to someone, you still may be liable for damages. Selling the product "as is" doesn't eliminate THIS liability.
As you can see, there are a lot of things to consider when you're constructing your money-back guarantee. Just remember the importance of offering an ethical, easy to understand, law-abiding guarantee, and you'll surely be rewarded with increased sales!
"We GUARANTEE our product until it dies, or you do"
Would you buy Jam from this man?
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