A basic part of business is dealing with customer complaints. While we’d all like to offer a flawless product or service, chances are, at some point, you’ll have to offer a refund for a faulty item. Some of the most useful business start-up advice to maximise your business’s profitability is to plan ahead for disputes and work them into your budget. In turn, this will help you deal with problems swiftly and efficiently, and hopefully rectify the problem to the customer’s satisfaction.
Furthermore, you must ensure you’re operating in accordance with trade regulations. In short, there’s a lot to bear in mind when handling refunds, returns or offering compensation. Get the facts to ensure you deal with them properly, and in such a way as to protect your income.
Know your legal obligations
Familiarise yourself with the Sale of Goods Act (SOGA), but take note: these rules don’t apply to you if you’re running a B2B service. For anyone dealing directly with customers, however, one slight misstep with regards to SOGA can create a commotion for you and your enterprise. In addition, it could damage your reputation. Be a responsible retailer and respect the rights of your customers.
When refunds aren’t required
It’s not unheard of for a customer to try and take advantage of the rules, and get money back for something that isn’t your fault. Keep in mind that you are not obligated to issue a refund, repair or replacement if the customer has misused your product, thus causing a fault. Similarly, you are not required to offer compensation if a customer has accidentally damaged the item. Consumers aren’t entitled to a replacement if they tried to repair the product themselves, and as a result, damaged the item, or if they purchased the item knowing it was faulty. Lastly, you don’t have to refund an item simply because your customer doesn’t like it (unless it was purchased without the customer seeing it beforehand - as is the case with most online sales). In the case of online, mail order or phone sales, the rules of distance selling apply, which means the customer is entitled to cancel their order within a week of buying your product. To comply with distance selling regulations, you must issue a refund within 30 calendar days, whether or not the consumer gives a reason for cancelling.
When are refunds necessary?
Conversely, if your product doesn’t do what it says on the tin, you’ll have to offer some form of compensation. Faulty items not suitable for the intended purpose require replacement, along with sub-standard products. To protect yourself against complaints and generally increase customer satisfaction, take great care when formulating a product description. If your merchandise or service is inappropriately defined, you run the risk of misleading your consumer base and leaving yourself open for legal action.
This is especially important, as SOGA states customers can make claims up to six years after the date of sale (five years in Scotland). However, that doesn’t mean your product needs to last six years - it’s just a window for customers to make a claim about product performance. A buyer cannot hold you responsible for fair wear and tear.
How to deal with complaints
You can’t sweep them under the rug. Similarly, you cannot deny customers their rights simply by posting a sign that reads: No refunds under any circumstances. These are illegal, and you will be fined for them. Dealing with complaints quickly and attempting to satisfy the customer is absolutely necessary. If disputes get out of hand, consult your local Trading Standards Office for advice.
Preventing disputes in the future
When you sell goods or services to a customer, you’re entering into a contract with them. This means that you’re required to sell products that match their description, be of satisfactory quality and be fit for purpose. Ensure all these things are true before your product hits the market and you’ll safeguard your business from losses.