Credit Card Rules for Returns, Refunds and Exchanges You Need to Know

Credit Card Rules for Returns, Refunds and Exchanges You Need to Know


There is no merchant that I know of who enjoys accepting returns of previously sold merchandise and issuing refunds or exchanging the returned item. It is a hassle, time-consuming and costly to deal with. It is also part of doing business in the U.S.


If you accept credit cards for payment, industry regulations hold you responsible for the developing and implementing your return and credit policies. A clear disclosure of these policies is required for both card-present and card-not-present merchants.


Apart from being a requirement, these policies can actually be good for business by helping you avoid misunderstandings which, in turn, will minimize customer disputes and chargebacks. There are several possible return and credit policies that you can adopt. Whatever your choice, it must be clearly disclosed to consumers before a transaction is completed. In this article I will review the available policy options for card-present and card-absent merchants.

Return and Credit Policy Disclosure for Card-Present Merchants


For card-present transactions, the policy disclosure should occur before the sale is completed. The following (or similar) statements should be printed on the transaction receipt near the signature field.

Disclosure Statement Explanation
No Refunds or Returns or Exchanges The merchant does not accept returned merchandise and does not issue refunds or merchandise exchanges.
Exchange Only The merchant agrees to exchange returned merchandise for similar merchandise that is equal in price to the original item.
In-Store Credit Only The merchant accepts returned merchandise and provides the customer with an in-store credit for the value of the returned item.
Special Circumstances The merchant and the customer have agreed to special terms (for example late delivery fees or restocking charges). Any special terms must be written on the sales receipt or invoice). The customer’s signature on the receipt or invoice proves acceptance of the agreed-upon special terms.
Timeshare The merchant is required to provide a full refund when a sales receipt has been processed and the customer has cancelled the transaction within 10 calendar days of the transaction date.


Return and Credit Policy Disclosure for Card-Absent Merchants


Mail order and telephone order (MO / TO). For the disclosure to be compliant with industry rules, your return and refund policies may be mailed, e-mailed, or faxed to the customer. To complete the sale, the customer should sign and return the disclosure statement to you.


E-commerce. If you accept credit cards online, your website must communicate your return and refund policy to your customers and require them to acknowledge acceptance by clicking on an “Agree” or a similar affirmative button. The terms and conditions of the sale must be displayed on the same checkout screen that shows the total transaction amount or on one of the website pages the customer accesses during the checkout process.


Additionally, e-commerce merchants are required to make their credit and return policy available to all visitors through a link that is typically placed within the website’s header or footer, which makes it accessible from all pages.

The Takeaway


You need to be upfront with your return and credit policy. You may not like it when you have to accept returns and issue refunds, but you will need to get over it quickly and do it the right way. You will keep consumers satisfied and will build your customer service reputation in the process (think about what makes Zappos so successful).


Make sure you comply with the above disclosure requirements and stick to the terms and conditions of your policy. There are few things consumers hate more than a business that is playing tricks on them and they will let everyone know if you do. Remember, bad news travels faster than the speed of light, even if that breaks a law of physics.


Image credit: Liveurbandenver.com.

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