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Created on 17.12.2018

No quibbles over the money-back guarantee

In Switzerland, there is no legal entitlement to return purchased goods. The principle of “adherence to the contract” applies. However, many companies use this service – which has now become standard – as a marketing tool. We explain the pitfalls to watch out for to ensure your SME doesn’t score an own goal with its money-back guarantee policy.

Someone’s trousers don’t fit, they don’t like the curtains or don’t really need the gadget after all – what do they do? Send them back. This is often a free and straightforward process and after a few working days the purchase price is credited back directly to their account or credit card.Most online shops allow their customers to return goods ordered, usually within a period of 30 to 90 days of purchase. Many consumers are keen to make use of this option. Retailers and department stores are forced to keep up with online competition and offer money-back guarantees and lengthy exchange periods. The prospect of being stuck with a bad buy deters customers. 

No legal basis for money-back guarantee

Although this line of argument is often used when trying to exchange goods, the return of goods is not governed by law. A purchase is a contractual agreement between two parties from which they cannot simply withdraw as they please. The purchaser is only entitled to exchange the goods purchased under exceptional circumstances. A legal guarantee applies, for example, if goods are defective or if the buyer was deliberately deceived. If you decide to offer your customers a guarantee, this is a service with no legal basis. Many retailers nevertheless communicate forcefully on receipts and in stores that they will refund the value of the goods in full within a certain period – if you decide to do the same, customers can then hold you to it. 

How guarantees work

The customer is king. There must nevertheless be limits to customer satisfaction. Make the exchange subject to certain conditions. Otherwise you may soon find your service is being exploited. Returns should be restricted to a certain period of time. This is generally within 14 to 30 days of purchase, depending on the sector.

The goods should also be returned in the original packaging as far as possible, but at the very least in excellent condition. Especially when it comes to clothing, retailers often get back items that have already been worn. Items that have obviously been used and can therefore no longer be sold should clearly be excluded from exchange or returns policies.

Customers should definitely be required to present their receipt to prove that they actually purchased the product from the retailer within the return period.

Will you provide a refund?

Many retailers do not offer cash refunds on exchanges. Instead, customers receive a credit note or can exchange the item purchased for another one of the same value. While this does not always go down well with customers, it represents a safe strategy for retailers. For smaller companies, in particular, the money-back guarantee can become risky. If an item has a major defect, you could also offer to repair it for your customer.

What about defects?

We have looked at how you could respond if customers wish to return an item because they don’t like it or aren’t using it. However, the situation is different if a product is defective. If a purchased product has a defect or if a defect becomes apparent within a two-year period – or within one year for used goods – the legal guarantee enters into force. The purchaser can decide whether to withdraw from the purchase contract, to demand a discount or to exchange the product. Your customer is entitled to a purchased item in perfect condition. If they buy a microwave from you, for example, you have to guarantee – in other words take responsibility – that the microwave will actually heat up food. If after a few weeks the microwave no longer heats up food properly, the purchaser has the option of asserting the two-year guarantee.However, caution needs to be exercised here too. According to the Swiss Federal Supreme Court, the guarantee only applies provided the defect is not attributable to negligent use by the purchaser. 

Return vs guarantee

The money-back guarantee has become a standard marketing tool. This is nevertheless only a service that has no legal basis. It is hard for SMEs to compete with large department stores and online shops in this area. It is important that you link the money-back guarantee to certain conditions. If you sell a product, you are obliged to provide a two-year guarantee on defects. 

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