Now Reading
Can Retailers Refuse Refunds Using POS Software?

Can Retailers Refuse Refunds Using POS Software?

Are you getting more refunds than you can handle? Are you just worried about the future and what it brings?

Although refunds are a part of doing business, the number of them seems to be growing every year.

So, can you refuse a return with your POS system?

Of course, you can.

Your store policy is what defines your ability to refund, not the software you are using. It will just allow you to process the refund and enable the customer to get their money back.

With that said, there are a few considerations to make when developing your return policy.

Are You Worried About Refunds With Your POS software?

2017 alone saw refunds total $355 billion in retail sales. That’s huge.

While most of your customers will be honest, you might come across customers who will try and take advantage of refunds.

You need to know how to deal with it.

This post will tell you what you need to know if you want to refuse refunds in your business. Follow along to learn what you should know to make the right decisions.

Federal And State Law For Customer Returns

In most cases, you aren’t required to offer returns. However, this changes if you didn’t fulfill your end of the bargain.

Here is what says about your refund obligations:

  • You are required to issue a refund if your product is defective in any way.
  • A “Cooling-Off Rule” allows buyers three days to claim a refund on any purchase over $25.

These rules are federal law. Each state also includes their own set of guidelines that you will need to know for your local locations.

While there are differences within state guidelines, the common theme is that retail stores need to make their return policies clear. If you don’t have a policy posted, many states allow the consumer up to 30 days to receive a full refund.

When your guidelines are clear, your customers will know what they can expect if something goes wrong. This will also help protect you whenever the problem customer comes along.

What Happens When You Suspect Return Fraud?

With online retail taking off, returning items is easier than ever. Local retail stores are being forced to adopt more friendly return policies to compete with online stores.

This is making them a bigger target than ever.

In their 2018 report, the National Retail Federation found that 8.2% of all returns are fraudulent. This number is down from a year ago, but still higher than it has been in the past.

Even the retail giant Amazon is taking notice and have stated that they will begin banning serial returners.

Keep these fraud tricks in mind if you suspect suspicious behavior:

Returning Old And Broken Merchandise

One common tactic is for a consumer to buy a new version of a broken product they own. Instead of returning the new item, the retailer instead gets the broken one at their expense.

Leaving it up to you to prove you didn’t deliver a defective product to the consumer.

Renting Products For A One-Time Occasion

For example, a special occasion comes around and you need a particular item for the event. You may buy a unique suite, a camera, or purchase entertainment for a party.

Renters will buy a product with the intention of using it once, returning it when finished, and wanting a full refund back.

See Also

Receipt Fraud With Stolen Receipts

People throw their receipts out. If they aren’t properly disposed of fraudsters can use them to commit return fraud. They take the stolen receipt to a store and grab the item off the shelf to return it for a refund.

Resellers Who Use You for Inventory

Buy low, sell high. This is the model for resellers who buy clearance and sale items to resell for profit.

However, these don’t always sell.

Some of these sellers will try to take advantage of your return policy to return unsold items.

Is There Anything Else You Can Do?

Luckily, there is. Retailers are beginning to work together to tackle this problem. There is a service now known as The Retail Equation, which will help flag serial returners.

The Retail Equation works by gathering the transactions from retailers and analyzing any problems. This way, when there is a refund request for your store, you can check with the service first.

If it throws a red flag, you can deny the refund.

Final Thoughts: Can Your POS Software Handle It?

In one word: absolutely.

Any good pos system will be able to detect fraudulent behavior. The real question is, are your retail policies designed correctly to discourage serial return fraud?

In good practice, keep your honest customers in mind when making these policies so you don’t make it difficult for them. Doing so will not only ease their minds, but yours when you handle returns.

Scroll To Top