To Refund Or Not To Refund– That Is The Question

wheresmymoneyI know the call all too well.  A customer calls us and says “I thought I canceled my account months ago but I just discovered you guys are still charging my credit card.”  After a long search, there’s no evidence of a canceled account, or even an attempt to cancel, or perhaps no response to our attempt at authenticating their request.

Upon telling the customer we don’t see any request to cancel, they then say, “Well I haven’t used the service in many months.”  A quick look at their activity confirms they are correct.

Now comes the kicker.  “I want you to refund me for all of the service I didn’t use.”  That request is enough to make any customer service representative squirm in their chair.  Refusing to do so almost certainly results in an escalated call, but agreeing to their request certainly won’t make management (especially the financial folks) smile either.  Raise your hand if you’ve chosen the low road and blamed the customer for not paying closer attention to their credit card statement.  Guilty!

I have chosen each of the following tacts in response to this situation:

1. Refund Everything- This is popular with the customer but not with company policy.  This is the pro-customer action, if you can still call someone that canceled their service a customer.

2. Partial Refund- Neither party is necessarily happy; just a little less angry.  This isn’t really pro-customer or pro-company.  It’s just sort of damage control or at best a compromise.

3. No Refund- Come to think of it, neither party is really happy here either.  Yes the company gets to keep the money but the customer is really unhappy and unlikely to ever be a customer again–if they were previously on the fence.

4. Offer Store Credit- I have toyed around with the option of store credit.  It doesn’t carry much weight when the customer says, “I will never sign up for service with you again.”  What good is store credit in that case?

I come to you not so much as the expert but as one seeking to do what’s best for our customers while still being smart as a business.  While refunding everything is the only strategy that is 100% pro-customer, is that the only option for a company striving to best awesome?  Do we place any responsibility on the customer?  What is your company policy on such refunds?  If you are a customer service professional, how do you enjoy upholding that policy?

I think we should always be as pro-customer as we can be.  I will always err on the side of assuming the customer is right and aiming to do right by them.  The bigger shame is in losing a customer.  Never forget that you need to answer the “Why did they cancel?” question over and over again and take action to improve based on it.  If you are focused on squeezing the last bit of money out of a customer on their way out the door, you’ve already lost.


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  • Wow, this post got me thinking!

    I typically take the 50/50 route in these cases…it’s the “damage control” route as you state. But, I do believe it is fair…but perhaps I believe that because it is a compromise for both parties.

    Not to sound like a meanie, but I typically compare it to those who order cable TV and never once turn their TV on…then forget to cancel for never using it. Is it really the cable company’s fault here?

    I guess I have some personal evaluation to do for these cases!

  • Hi Jeremy – this is a tough situation without any easy answers.

    Here’s a couple of thoughts:

    1) Consider the economic damage of a full refund. If it’s really not that much, just do it. You avoid a potential detractor that way.

    2) If there’s a lot of money on the table, try taking a partnership approach. Suggest a couple of options to the customer to meet them halfway. This involves them in the process and makes it feel like a bit of a negotiation.

    Above all, this is a great opportunity for an after action review. For example, if I were in your shoes I’d wonder if there were many other customers who had inactive accounts. Perhaps so proactive outreach would get them reignited with’s awesome service. Or, at the very least, it would prevent an upset customer down the road.

  • I agree with Jeff; the best way forward is to setup a system that doesn’t let people get into that situation. Getting the “hey, we noticed you haven’t been using your account in a while” email not only helps avoid the months of refund, but also is an opportunity to find out why they have been inactive.

    Some customers forget, some are seasonal users, some are happy to keep paying in order to keep their account there when they need it.

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