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Things Went Terribly, Horribly Wrong and Now My Client or Customer Wants…A REFUND. (#FML, WHAT DO I DO?)

In: Clients, Hard Stuff, Legal,

THANK VODKA this isn’t going to happen a lot (because I know you, and I know you’re excellent at what you do) but every once in a while you’ll start a project with a client who is literally from Mars, or you’ll get that scammer asshat who buys your digital product and then requests a refund immediately (I love these guys) and you’re going to have to figure out what to do.

Should I give them a refund?
Should I stick to my guns?
Should I ignore the email all together? (Don’t do that.)
Should I run and hide in a hole and hope the problem goes away? (Tempting, but don’t you dare do that, either.)

It’s hard having to make all of these weirdo decisions, isn’t it?! All you wanted to do was bring something fucking awesome into the world, and now here you are having an existential crisis about what’s fair and what’s not and jesus christ WHY MEEEEEEE.

But remember yesterday when I said that you need a contract in place that does the refereeing for you—so you don’t have to? This is a really great example of what I meant by that, and what I mean, in general, when you need a policy for the myriad of different what-if scenarios that could, and do happen, when you do business with complete strangers on the Internet. *wide smile*

So in this case, what you need here is a refund policy that clearly outlines when you do offer refunds, and when you don’t.

If you are selling services, this refund policy will be outlined in your Master Services Agreement in the form of a Termination Clause. My termination clause, in particular, outlines four specific what-if scenarios:

  1. What happens if the client wants to cancel the project, for any reason? (Hint: you need a kill fee, which is usually 30%-50% of the total project value, or what they've paid to date, or some combination of both.)
  2. What happens if I need to cancel the project, for any reason? (Do they get their money back? What if you’ve already done 25% of the work, but then discover that your client is an unethical jerk who is asking you to do things you don't feel comfortable doing?)
  3. What happens if the client stops responding / communicating / drops off the face of the earth? (I have a clause that states that if a client is MIA for fourteen days, the project automatically terminates and no refunds are offered.)
  4. What happens if there is a disagreement over final work product? (In this case, I prefer terms that state that a refund is not available, since the work has been completed, but that an additional revision round can be provided at X cost.)

You know what’s great about creating your own business policies? They’re yours. So there is no right or wrong answer: only what feels right for you in your business. But this is precisely why you send a client an agreement to sign: because by them signing, they’re agreeing to your policies. It does not matter how you've structured them—what’s important is that they feel fair, to you, and that the client has signed off that those feel fair to them as well.

But what happens in the case of digital products?

You’re selling an eBook, or a program, or a course online, and obviously you aren’t sending every single one of your customers a contract before they push “buy now.” That’s not how e-Commerce works. So in this case, you still need a refund policy, but it shows up in a different place: your Terms & Conditions.

Oooo la la! Terms & Conditions, baby! Otherwise known as T’s & C’s.  I bet when you hear the word, “Terms and Conditions” you think of all the fine print that no one ever reads, that’s just some never-ending legalese blah blah blah. But alas, the Terms & Conditions on a website are, in effect, a contract that you are agreeing to just by purchasing. (And in most cases, just by visiting.) Whoa, right? More importantly, however, this means that if you are selling digital products in any way, shape or form, you need your own T’s and C’s—because that’s where you put important things like refund policies.

Most business owners ignore this kind of stuff all together because creativity + legalese = *brain explosion*. There’s also a lot of anxiety over what to say, and the fact that all this formal jargon feels really off-brand, cold, and kind of mean. But surprise! Your refund policy can say whatever it wants, in whatever tone you want, as long as it’s clear that if this happens, this will happen.

A good place to start is by listing every what-if scenario that you can think of, as well as scenarios you’ve found yourself in, in the past, that you didn’t expect. (For example, the clause I now have in my client service agreement that automatically terminates a project if a client goes MIA and becomes unresponsive.) And then consider: in an ideal, reasonable world, what would you like to have happen?

Because nothing in business will ever be perfect. But when you’ve made a good faith effort to be prepared?

It doesn’t have to be.



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