Return policy: Overview, definition, and example
What is return policy?
A return policy is a set of rules a business creates that explains how customers can return or exchange products they’ve purchased. It outlines the conditions under which returns are accepted, how long customers have to return items, whether they’ll receive a refund or store credit, and who pays for return shipping.
In simple terms, it tells your customers if, when, and how they can return something they bought from you.
Why is return policy important?
A clear return policy helps build trust with customers, manage expectations, and protect your business from disputes. It also helps prevent fraud and reduce losses by setting limits on how and when returns are allowed.
For SMBs, a well-written return policy balances customer service with cost control. It can reduce chargebacks, streamline operations, and give your team a clear process to follow when handling returns. In many industries—especially retail and e-commerce—a return policy is a key part of the buying experience.
Understanding return policy through an example
Let’s say you run an online clothing store. Your return policy states that customers can return unworn items within 30 days for a full refund, but sale items are final.
A customer buys a shirt and decides it doesn’t fit. They send it back within 15 days, and your team inspects it—still in new condition—so you issue a refund. But another customer tries to return a clearance item after 40 days. According to your policy, you can decline that return, avoiding a loss and a messy back-and-forth.
An example of a return policy clause
Here’s how a return policy clause might appear in your website terms or sales contract:
“Customers may return unused and undamaged items within thirty (30) days of the purchase date for a full refund. Items must be returned in their original packaging with proof of purchase. Final sale items are non-refundable. Return shipping costs are the responsibility of the customer unless the item was received damaged or incorrect.”
Conclusion
A return policy is more than just a customer service tool—it’s a practical way to protect your business while giving buyers confidence. Whether you run a physical store, an e-commerce site, or a service-based business, having a clear, fair return policy helps you avoid confusion and manage returns consistently.
If you're selling products, make sure your return policy is easy to understand, visible to customers, and aligned with how you want to do business. It can make or break the post-purchase experience.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.