A refund policy is a written statement that tells customers what happens when they want their money back

A refund policy is a document you create and publish that explains the conditions under which you will return a customer's payment, how long they have to request it, what they need to do, and what happens to their product or service in the meantime. It is not a legal contract in most cases — it is a public statement of your business rules. The clearer you are about these rules before someone pays you, the fewer disputes you will have afterward.

The policy lives on your website, in your terms of service, or both. It should be straightforward to find and written in language your actual customers understand, not legal jargon. A customer should be able to read it in under two minutes and know exactly whether they can get their money back if they change their mind.

Key Takeaways

  • A refund policy must state the timeframe (how many days after purchase a customer can request a refund), the conditions (what state the product or service must be in), and the process (how they request it and how long approval takes).
  • Non-refundable items should be listed explicitly by name or category so a customer knows before they buy which purchases cannot be reversed.
  • The policy should address what happens to digital products, physical goods, and services separately, because the rules differ for each.
  • Publishing your policy before you take payment protects you legally and reduces customer complaints because expectations are set in advance.
  • Your policy must be consistent with the laws in the places where you do business, which vary by state and country.

Decide on your refund window and put it in writing

The refund window is the number of days after purchase during which a customer can request their money back. This is the single most important number in your policy. Common windows are 14 days, 30 days, or 60 days, but you can choose any period that makes sense for your business. The shorter the window, the fewer refund requests you will receive, but the less time customers have to change their mind.

Once you choose a window, state it clearly in your policy: "Customers may request a refund within 30 days of purchase." Do not say "around 30 days" or "approximately one month" — use a specific number. If you count the window differently for different products (for example, 14 days for digital downloads but 30 days for physical goods), list each separately so there is no confusion.

The clock usually starts on the date of purchase, not the date of delivery. If you ship a physical product and it arrives 10 days later, the refund window still began on the purchase date. If this matters for your business, state it: "The refund window begins on the date of purchase, not the date of delivery."

List what is refundable and what is not

Most businesses have items or services that cannot be refunded. Digital products like ebooks or software, custom orders, and items marked as final sale are common examples. The more specific you are, the fewer disputes you will have. Instead of saying "some items are non-refundable," list them by name or category.

For example: "The following items cannot be refunded: digital downloads, custom orders, gift cards, and items purchased during a clearance sale." If you have many non-refundable items, you can organize them by type. If almost everything is refundable, you can say "All items are refundable except the following" and list the exceptions.

If a customer has to meet a condition to get a refund — for example, the product must be unused and in original packaging, or a service must not have been started — state that condition in the same section. "Physical goods may be refunded if they are unused and in original packaging. Opened or used items are non-refundable." This prevents a customer from opening a product, using it, and then requesting a refund.

Explain the refund process step by step

Tell customers exactly what they need to do to request a refund. This might be as straightforward as "email support@yourcompany.com with your order number" or as detailed as a multi-step form on your website. The simpler the process, the fewer customers will give up halfway through.

Include the information they need to provide: order number, date of purchase, reason for the refund, and proof of purchase if applicable. If you need them to return a physical product before you issue a refund, say so: "Please ship the item back to [address]. Once we receive and inspect it, we will process your refund within 5 business days."

State how long approval takes. "Refund requests are reviewed within 3 business days" or "We will notify you of approval or denial within one week." Then state how long the actual refund takes to appear in their account. "Approved refunds are issued within 5 to 10 business days, depending on your bank." This sets expectations and prevents customers from thinking something went wrong when the money does not appear when ready.

Address digital products, physical goods, and services separately

The rules for refunding these three categories are different, and your policy should reflect that. A customer who downloads an ebook when ready has access to it and cannot return it the way they would return a physical book. A service that has already started cannot be refunded in the same way as one that has not.

Digital products: State whether they are refundable at all, and if so, under what conditions. "Digital downloads are non-refundable once accessed" is clear. "Digital downloads may be refunded within 24 hours of purchase if not downloaded" is also clear and gives customers a small window to change their mind.

Physical goods: Explain the return process, who pays for shipping, and what condition the item must be in. "Customers pay for return shipping. Items must be unused and in original packaging to may have access to for a refund."

Services: Explain whether refunds are available if a service has not started, and what happens if it has. "Services may be cancelled and refunded in full if cancelled before the start date. Services in progress are non-refundable." If you offer a trial period, state the length and how to cancel it.

Specify what happens to refund fees and shipping costs

If a customer paid for shipping, will you refund that? If they paid a processing fee, does that come back? These details matter and should be in your policy.

Common approaches: "Refunds include the original shipping cost" or "Refunds exclude shipping fees" or "Refunds include shipping only if the item arrived damaged." If you charge a restocking fee — a percentage of the purchase price that you keep when a customer returns an item — state it here: "A 15% restocking fee applies to all returns."

If you are refunding a payment made by credit card, the refund goes back to the card. If it was paid by bank transfer, you may need the customer's bank details to send the refund. State this if it applies: "Refunds are issued to the original payment method. If you paid by bank transfer, we will contact you for your account details."

Make the policy straightforward to find and keep it up to date

Your refund policy should be linked from your checkout page, your website footer, and your terms of service. A customer should not have to hunt for it. If you sell on multiple platforms — your own website, Amazon, Etsy, or others — check whether each platform has its own refund policy requirements. You may need separate policies for each.

Review your policy once a year or whenever your business changes. If you start offering a new product type, add it to the policy. If you change your refund window, update the policy and notify existing customers if the change affects them. Keep a record of when you changed the policy and what changed, in case a customer disputes a refund based on an older version.

Frequently Asked Questions

Do I have to offer refunds at all?

That depends on where you do business. In the United States, federal law does not require refunds for purchases made in person or online, but some states and countries have consumer protection laws that do. The European Union requires a 14-day cooling-off period for online purchases. Check the laws in your state or country before you write your policy. Even if you are not required to offer refunds, many customers expect them, and offering them can reduce disputes.

What if a customer requests a refund after the window closes?

Your policy gives you the right to deny it. However, you can choose to make exceptions — for example, if the product arrived damaged or if the customer has a legitimate complaint. Document your decision. If you deny the refund, explain why in writing so the customer understands it was not arbitrary.

Can I change my refund policy after someone has already paid?

The policy in effect at the time of purchase is the one that applies to that purchase. If you change your policy, the new version applies only to future purchases. If you make the policy stricter, notify customers who have not yet received their product so they know the terms have changed.

Should my refund policy be different for different customer types?

You can have different policies for different product categories, but not for different people based on who they are. You cannot offer refunds to some customers and not others based on their location, age, or any other personal characteristic. You can offer different terms for wholesale versus retail purchases, or for business versus consumer purchases, as long as the terms are stated in advance.

What should I do if a customer disputes a refund with their credit card company?

This is called a chargeback. Respond to the chargeback with documentation: your refund policy, proof that the customer received the product or service, and any communication showing you offered a refund. Keep records of all transactions and refund requests for at least one year. If chargebacks become frequent, your payment processor may charge you a fee or close your account.