How to manage refund requests

This blog post was first published on 12 January 2021

The content of this blog post is information only and does not include legal advice.

Today we’re talking about how to manage that dreaded question: “Please may I have a refund?”

Receiving a message from a client asking for their money back is one of the things that many entrepreneurs fear the most. Whether you receive a refund request from a current client who is at the beginning or midway through a programme, or even worse, several months after you’ve finishing working together, it’s far from a highlight of running your own business. The sad reality is that even if you think this will never happen to you, these are completely valid concerns for every business owner. Here at Lucy Legal we see this happen to other business owners a lot (and a lot more than people share on social media!).

We know that you’re passionate about the work you do and that you want your customers/ clients to be happy. We know also know that’s it’s important to you that your business is legit, so today on the blog we’re going to begin to shed light on what you can do to manage refund requests in a legally sound, professional and fair way.

We’ll begin to touch on a few things you need to know when marketing, selling, onboarding and serving clients, as well as what to consider in the event of receiving a refund request.

It’s important to note at the outset though that even if you put your best foot forward on the legal side of things, ultimately we cannot guarantee that you won’t receive a refund claim. The reality is that someone could go still through a 3 month coaching process and ask you for a refund. That said, doing what you can to ensure that firstly where possible you are set up to avoid a request but secondly you know your terms are legit so that you can manage any refund requests that you receive.

Starting and selling out on the right foot

As much as you can’t stop refund requests from coming in, there are some things that you can do to ensure you’ve done everything within your power to keep your clients happy. The key to this is being clear and transparent in what you can offer as a business and managing your potential clients’ expectations from the outset.

First and foremost, it’s important to think about how you’re showing up and how you’re presenting your business online through your marketing, whether on social media and on your website. That means being careful and really thinking about what you’re saying and potentially promising potential clients in your social media captions, your Instagram Stories, your LIVE streams, your Instagram Reels, Instagram Guides, your emails, your sales pages and your website more generally.

Whilst these don’t form the terms of a contract, they do count as an invitation to treat, whereby you are suggesting to people what you are offering. If what you’re suggesting you can offer isn’t representative of what you can deliver then this could go towards a claim of misrepresentation. Are you promising them a transformation? One mistake that we see a lot, especially in the coaching industry, is business owners promising a transformation they cannot guarantee. An example of this may be suggesting that you could help a client to go from anxious to anxiety free when you cannot guarantee that someone will leave your time together being free from anxiety. Make sure that you’re sense-checking your wording and copy, so that enticing language does not cross the line and become misleading.

You might have seen other people in your industry using phrases such as “no refunds” or “no contract” in their marketing and sales pages. We have heard this a lot from clients in the coaching industry, whereby marketing and selling methods are quite often passed down and learned from others in the industry without question. Please know that just because someone else is doing something a particular way it doesn’t mean that it’s legal, even if they are a big name in the industry. There are many circumstances whereby customers are entitled to a refund and saying otherwise can open up a can of problematic worms. The inclusion of phrases such as ‘no contract’ are concerning by doing so, business owners are failing to protect their intellectual property and creating situations where they aren’t properly protecting their clients.

These include terms, disclaimers, refund terms (for online and in person products and services and digital downloads), cancellation policies and how much you are permitted to change the scope of the terms especially during a launch and how to properly market in accordance with the law in respect of disclaimers and sales descriptions.

Having solid foundations in client relationships- contracts

Before you even think about how you might respond if you receive a request for a refund, it’s important to make sure you have the solid legal foundations in place in the onboarding process, whereby you’re formally entering a business relationship. Having legit client contracts in place ensures that you’re making it clear to clients as to what they can reasonably expect from working from you and where where you both stand legally.

Contracts are binding legal agreements enforceable by law, but to be enforceable they must have certain requirements in place to be considered as a valid contract. Therefore, it’s vital that you draft your contracts carefully to ensure they meet these requirements and cover everything that you need legally and to so that you cover your unique business position and so that you can actually deliver on what you promise. Otherwise you increase the risk of having a not having the legal protection in place for you and your customers.

It’s important to highlight again that whilst it’s crucial that you have contracts in place to protect your business and your clients, no matter how how great your contracts are, you can aim to be watertight, but you can’t stop a refund request coming in. You need to know how to respond.

What you can do during working together

Whilst we can cannot prescribe a magic pill that will stop you from getting refund requests, building and maintaining good relationships is essential in business and good communication is key. One tip that we would highly recommend service providers do is to have check in points with clients during the time your working together. Depending on the service you offer, this check in might involve asking questions such as:

“How do you feel things are going?”

“Do you feel like you’re moving forward?”

“Is there anything you like more support with, and if so, what?”

This practice will help you to see whether your clients are happy with your service, to receive any feedback and make any adjustments you need to be in full integrity and provide a great service to each client. In addition, so long as everything else is above board, having these check in points help you to feel more confident in standing up for yourself as a business owner in the event that you receive a refund request some time after a project is complete. We recommend checking in and asking for feedback a few times over the period of the contract. The appropriate number of times to check in will depend on the nature of the service you’re offering, how long the contract is, the unique client and what you leaves you feeling comfortable and confident as a business owner.

Responding to refund requests

Here at Lucy Legal we are here to empower you with the knowledge of what the law is and how to stay on the right side of it while running your business, as well as providing you the tools to ensure that you have your legal ducks in a row. However, it’s so important to take a step back and look at the bigger picture. We’re sure that you started your business because you are passionate about your zone of genius and wanted to help people and make a difference. We know that it’s important to you that your customers are happy. Even if you’re on the right side of the law, if someone is really unhappy and wants a refund it is sometimes better to just give them a refund, rather than damage the relationship that you have with them and potentially your business reputation.

If you have decided you don’t want to automatically provide a refund you will need to consider the legal position. If the customer purchased online then they may have 14 days to ask for a refund without giving a reason. Their ability to claim this will depend on their status as a purchaser (business or consumer) and what they were purchasing. Some items are non-refundable such as perishable goods and certain types of clothing but the eligibility for a refund will often depend on the rights you have explained at the point of purchase, and if purchasing online the confirmation of the sale you provide.

As you cannot guarantee that you won’t receive a refund request, it’s important to assess the risk and put money aside so you can make sure that your business can withstand the possibility of you needing to issue refunds to customers unexpectedly.

This may help, The Refunds, Rights and Responses Toolkit.

We know that the legal side of things can seem scary. It’s likely that you’d much rather spend your time and energy focussing on your zone of genius rather than trying to work out the legal stuff yourself and then not being sure if you’ve got it right.

We are passionate about supporting you to get the legal side of things sorted, so that you can continue focussing on doing what you love while knowing that you’ve got the knowledge and documents in place to ensure that your business is legit.

Get Legit, is our six week course to reduce the overwhelm over and take control of the legal elements of protecting your clients, your brand and your business. 

By the end of the 6 weeks you will have a clear understanding on how to protect your clients and your business from a legal perspective. You will also have a clear plan on the tasks you need to implement in the short term and also a checklist of what elements of business you need to review as you grow, scale and launch new products.

During our 6 weeks together we focus on key aspects of legally protecting your business. We will cover:

• The legal elements of selling - including terms, disclaimers, when you need to provide refunds and the different wording required for sales made online, in person or as an electronic download

• How to protect your client’s - GDPR - what you must do by law and how to ensure you stay up-to-date

• How to protect your business - Copyright and trade marks

• Contracts - what you need to include and why

• The ongoing legal tasks for running a business

We hope that this week’s blog was helpful and feel free to send us an email to [email protected] if you have any topics that you would like us to discuss on the blog in the future.

Team Lucy Legal x