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I'm wonder how is 30-day moneyback guarantee handled with recurring subscription. Does the customer have to request refund WITHIN 30 days or even for a period of X after 30 days have passed? Whats the standard?

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4 Answers

up vote 1 down vote accepted

In the US, Federal Law allows the consumer 60 days from the date of their billing statement date to contest the charges. When you bill them is not relevant, except in extending the time.

So if the customer starts their subscription on the 1st, and you bill on that date (which means that the charge clears on the 2nd), and the credit card company issues their statement to the customer on the first- your charge won't show up until the next billing cycle, 30 days later. And the customer has 60 days after that to contest the charge.

So, in practice, the consumer can have from 60 - 90 days to issue a chargeback on your service (unless the card was present at the time of transaction).

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up vote 4 down vote

In the US, you can refer to the FTC guide on pre-sales warranties for insight. Clearly spelling out what defines the start of service is key.

Example: with a 30 day satisfaction guarantee - is start of service defined as:

  • at the start of the "Free trial"
  • after trial / start of payment cycle
  • at the start of the initial payment cycle
  • at the start of each payment cycle

Of course, a published warranty section reviewed by a competent lawyer is helpful in addressing these scenarios.

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up vote 2 down vote

There are 3 different things here:

  1. The details of the guarantee - each company has it's own idea about what a "30 days money back guarantee" is, usually it's buried in some terms of service document and vary a lot between companies, for example, a lot of companies only offer the guarantee for the first payment.

  2. Chargeback conditions - Its very possible that the customer can ask for a chargeback from the credit card company long after 30 days have passed - so a customer can ask for a refund after 60 days, you refuse because it's obviously after the promised 30 days and the customer calls the credit card company and get the money back - and you are fined for the chargeback.

  3. What a company actually does - I offer a 30 days money back guarantee to my customers but I issue a refund even long after the 30 days are over (I think I once send a refund 6 months after the sale) on the other hand I'm sure there are companies that refuse to give refunds even when you are clearly within the promised guarantee period.

So, every company has a different official policy, the customer has options to get money back even not under the company's policy and many companies don't really operate according to their official policy.

My suggestion is, if you are running a software (or other digital product) company, is to always offer a 30 day (or more) guarantee and to be very specific about it's conditions in your terms of use - then, when someone asks for a refund just give it to them even if they aren't entitled to it according to your conditions.

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up vote 0 down vote

In three separate companies now, I have offered 30 and 60 day money back guarantees and I can't remember a single request for a refund. I am sure there was at least one, but the point is: they're rare.

If you have a legit product and offer a money back guarantee, my experience tells me the request for refund might be an edge case and the rule for business is -- don't optimize the edge cases. Be generous with your refund and be liberal on your interpretation. If somebody asks for a refund on day 45, refund the whole thing -- all 45 days. On day 90, offer to refund their last 30 days. Etc.

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