How Refund Policies Encourage You To Spend Money

When you’re on the fence about a purchase, there are five words that usually push you into buying: “I can always return it.” That may be true, but retailers definitely use this thinking to their advantage, and their refund policies subtly encourage you to spend more.

Photo by Georgie Pauwels.

Money writer Josh Becker points out that 91 per cent of consumers say a company’s return policy is an important factor in their purchasing decision. Becker points out how retailers use this to their advantage:

The prevailing question retailers ask when establishing their refund policy is “What policy results in the greatest profit for our business?” …It is not entirely a win-win situation for the consumer. [The consumer] is not considering the time, energy, and gas needed to return the item if so decided. And he is not considering that returning this item will require him to re-enter the very store that persuaded him to buy something he didn’t need in the first place.

In other words, by having a flexible refund policy, stores encourage you to go ahead and spend the money. And if you need to return the item, they get you back in the store. Obviously, this doesn’t mean you’re absolutely going to spend the money, it’s just something to be mindful of in your shopping decisions. For more info, head to Becker’s full article below.

How Refund Policies Encourage Spending (and Reduce Returning ) via Rockstar Finance


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