Why You Should Always Have a 100% Money Back Guarantee

When I started BudgetSimple, I had a bold policy. 100% refunds, guaranteed for life, no questions asked. I think I first learned this mentality from my very first job, at Sears. At Sears, the customer was always right.

I worked at a Sears in a pretty poor blue collar part of Maryland. Very often, customers would come in, clearly trying to rip off Sears by returning heavily used merchandise. Do you know what the policy was? Return the items. The customer is always right.

This was hammered into my head, and I saw the results. Because customers knew they could always return items, they purchased with less thought. For every customer that had a clearly fraudulent return, there were ten others buying because of the same policy which wouldn’t return their merchandise. This trust creates a loyalty that is hard to replicate with coupons.

But why else should your startup provide a 100% refund guarantee? Well, one simple reason: Chargebacks. That’s right, every credit card customer can submit a chargeback for pretty much any reason. The default behavior of a chargeback is YOU instantly lose the money, and the customer instantly gets it back. You then enter a dispute phase that lasts between 30-45 days. More often than not, the customer will win, and then not only do you have to forcibly return their money, you’re also fined $15 for the trouble. This is why I always return a customer’s money instantly if they ask for it.

Now on the other hand, if they submit a chargeback without requesting a refund or cancelling, I always challenge it, and most of the time I win. The customer has to prove that they tried to seek remediation in some way, and if they did not or the service was fulfilled as promised, they usually don’t have a case, and you can win. But in any event, chargebacks are a pain in the ass, just refund their money and move on.