📋 Overview

You've received a demand letter from a consumer requesting a refund for a purchase. California has specific refund policy requirements under Civil Code Section 1723 that govern when and how businesses must accept returns. Understanding your obligations and rights is essential to crafting an appropriate response.

⚠ Refund Policy Display

California requires refund policies to be conspicuously displayed. If you have no posted policy, consumers may return goods within 30 days for a full refund.

🕒 Time Matters

Prompt response demonstrates good faith. Delays can lead to chargeback escalation, BBB complaints, or small claims court filings.

💰 Potential Exposure

Unfair business practices under Bus. & Prof. Code 17200 can result in restitution, injunctions, and civil penalties up to $2,500 per violation.

Common Refund Claim Scenarios

  • Product not as described - Item differs from listing, photos, or specifications
  • Defective merchandise - Product arrived damaged or malfunctioned shortly after purchase
  • Service not rendered - Paid for service that was never performed
  • Buyer's remorse - Consumer simply changed their mind (policy-dependent)
  • Unauthorized charges - Consumer claims they didn't authorize the purchase
  • Shipping/delivery issues - Product lost, damaged, or never delivered
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🔍 Evaluate the Claim

Before responding, thoroughly review the transaction and the consumer's claims. Understanding the facts will help determine whether to grant the refund, deny it, or negotiate a resolution.

Risk Assessment Matrix

Claim Type If Valid Risk Level
No refund policy posted Must accept return within 30 days - Civil Code 1723 HIGH
Product not as described Full refund + potential CLRA liability HIGH
Defective product Refund or replacement under Song-Beverly Act MEDIUM
Return within posted policy Must honor your stated policy HIGH
Return outside policy window Can deny if policy properly displayed LOW

📄 Transaction Records

  • ✓ Original invoice or receipt
  • ✓ Payment confirmation and method
  • ✓ Product description/listing at time of sale
  • ✓ Shipping/delivery confirmation

📝 Policy Documentation

  • ✓ Posted refund policy (with date proof)
  • ✓ Terms and conditions at checkout
  • ✓ Customer acknowledgment of policy
  • ✓ Prior communications with customer

⚠ California Civil Code 1723 Requirements

Your refund policy must be displayed at each point of sale, on receipts, and at entrances (for brick-and-mortar). If you don't have a properly displayed policy, California law presumes a 30-day full refund right. The policy must be in at least 10-point bold type or conspicuously posted in-store.

🛡 Your Defenses

Even if a consumer demands a refund, you may have valid grounds to deny or limit the return. Here are common seller defenses.

Properly Posted "No Refund" or Limited Return Policy

Under Civil Code 1723, if your return policy is conspicuously displayed and excludes certain items or sets a time limit, you can enforce it. The consumer must have had reasonable notice before purchase.

When to use: You have documented proof that your return policy was displayed at point of sale and the return request falls outside policy terms.

Product Delivered as Described

If the product matches its description, specifications, and images, "not what I expected" is not grounds for a mandatory refund. The consumer's subjective dissatisfaction doesn't create liability.

When to use: Product listings, photos, and specifications accurately describe what was delivered.

Consumer-Caused Damage or Misuse

If the product was damaged due to consumer misuse, modification, or negligence, you're not obligated to issue a refund. Document the condition of returned items.

When to use: Inspection shows damage inconsistent with shipping or manufacturing defects.

Time Limitation - Return Window Expired

If your properly-posted policy sets a return window (e.g., 14 days) and the consumer is outside that window, you can deny the return unless defect claims apply.

When to use: Consumer's return request is made after your stated return period has expired.

Excluded Category

Certain items can be excluded from return policies: perishables, personalized items, intimate apparel, hazardous materials, or items where return poses health/safety concerns.

When to use: The product falls into an excluded category as stated in your policy.

🚨 Weak Defenses to Avoid

  • "All sales final" without proper display - Not enforceable in California
  • "Policy is on our website" without checkout acknowledgment - Insufficient notice
  • "Restocking fee" not disclosed before sale - Cannot be charged
  • "We don't accept returns on sale items" without pre-sale disclosure - Invalid

⚖ Response Options

Based on your evaluation, choose the appropriate response strategy.

Issue Full Refund

If the claim has merit or fighting costs more than the refund, process the refund promptly. Document everything and get acknowledgment of full resolution.

  • Prevents chargeback
  • Avoids negative reviews
  • No legal costs

Offer Exchange or Store Credit

When your policy allows, offer an exchange or store credit instead of refund. Many consumers accept this compromise.

  • Retains revenue
  • Often satisfies customer
  • Demonstrates good faith

Partial Refund

If the product was used or returned in lesser condition, offer a partial refund. Deduct for documented wear, missing parts, or restocking (if disclosed).

  • Compromise position
  • Accounts for depreciation
  • May satisfy both parties

Deny & Document

If you have strong defenses (policy displayed, outside window, excluded item), deny the refund with clear explanation citing your policy and the law.

  • Protects policy integrity
  • Discourages frivolous claims
  • Higher escalation risk

📊 Cost-Benefit Analysis: Refund vs. Dispute

Example: $500 refund demand

Refund amount requested $500
Your cost of goods sold $200
Chargeback fee if they dispute $25-100
Time cost of fighting dispute $100-300
Negative review business impact $200-1000+
Small claims court defense cost $500-2000
COST IF YOU LOSE DISPUTE $1,025-3,900+

💡 When to Just Refund

For claims under $200, the cost of fighting usually exceeds the refund. For claims $200-$1000, consider the strength of your defenses. Only fight when: (1) your policy was clearly displayed, (2) the claim is clearly frivolous, and (3) you have documentation to prove your position.

📝 Sample Responses

Copy and customize these response templates for your situation.

Granting Full Refund
We acknowledge your refund request dated [DATE] regarding Order #[ORDER NUMBER] for [PRODUCT]. After reviewing your concerns, we have processed a full refund of [$AMOUNT] to your original payment method. Please allow 5-10 business days for the credit to appear on your statement. We apologize for any inconvenience and appreciate your understanding. Please consider this matter fully resolved. If you have any questions, please contact us at [EMAIL/PHONE].
Offering Exchange or Store Credit
Thank you for contacting us regarding your recent purchase of [PRODUCT] (Order #[ORDER NUMBER]). While our posted return policy provides for exchanges and store credit rather than cash refunds for [reason - e.g., "items returned after 14 days"], we want to work with you to find a satisfactory resolution. We are pleased to offer you: - A full exchange for any product of equal or lesser value, or - Store credit of [$AMOUNT] that never expires Please let us know which option you prefer, and we'll process it immediately. If you believe special circumstances warrant a cash refund, please provide additional details and we'll review.
Denying Refund - Policy Grounds
We have reviewed your refund request dated [DATE] for Order #[ORDER NUMBER]. Our records indicate that your order was placed on [PURCHASE DATE]. At the time of purchase, our return policy was clearly displayed at checkout, on your receipt, and on our website. That policy states: "[QUOTE YOUR POLICY]." Your request, submitted [X] days after purchase, falls outside our [Y]-day return window. Under California Civil Code Section 1723, a properly displayed return policy is enforceable. While we are unable to process a refund under these circumstances, we would be happy to offer a [X]% discount on a future purchase as a gesture of goodwill. Please contact us if you have questions about this decision.
Requesting Additional Information
Thank you for your message regarding Order #[ORDER NUMBER]. We take all customer concerns seriously and want to help resolve this matter. To properly evaluate your refund request, please provide: 1. Photos of the product showing the issue described 2. Your original receipt or proof of purchase 3. Description of when you first noticed the issue 4. Confirmation of whether the item has been used or remains in original packaging Once we receive this information, we will review your claim within 3-5 business days and contact you with our determination. If you have documentation supporting defective merchandise, please include that as well, as different consumer protections may apply under the Song-Beverly Consumer Warranty Act.

🚀 Next Steps

What to do after receiving a consumer refund demand.

Step 1: Review Records

Pull the transaction, your posted policy at time of sale, and all communications with the customer.

Step 2: Assess Validity

Determine if the claim has merit based on your policy, the product condition, and applicable law.

Step 3: Calculate Costs

Compare refund amount to dispute costs, chargeback risk, and reputational impact.

Step 4: Respond Professionally

Send clear, documented response. Keep copies of everything.

If They File a Chargeback

  • Gather evidence quickly - You typically have 7-14 days to respond
  • Provide documentation - Proof of delivery, policy display, customer communications
  • Consider accepting - Fighting chargebacks costs time and has low win rates for "not as described" claims

If They File in Small Claims Court

  • Respond within deadline - Typically 20-30 days after service
  • Gather evidence - Policy display proof, transaction records, product documentation
  • Consider settlement - Court takes half a day minimum; calculate your time cost

Get Professional Help

Consumer disputes can escalate quickly. Get a professional response letter drafted on attorney letterhead.

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California Resources

  • Civil Code 1723: Refund policy requirements for retailers
  • Business & Professions Code 17200: Unfair business practices
  • Song-Beverly Consumer Warranty Act: Civil Code 1790-1795.8
  • California Attorney General: oag.ca.gov - Consumer protection guidance