A money-back guarantee, also known as a satisfaction guarantee, is essentially a simple
guarantee
Guarantee is a legal term more comprehensive and of higher import than either warranty or "security". It most commonly designates a private transaction by means of which one person, to obtain some trust, confidence or credit for another, engages ...
that, if a buyer is not satisfied with a product or service, a refund will be made.
The 18th century entrepreneur
Josiah Wedgwood
Josiah Wedgwood (12 July 1730 – 3 January 1795) was an English potter, entrepreneur and abolitionist. Founding the Wedgwood company in 1759, he developed improved pottery bodies by systematic experimentation, and was the leader in the indust ...
pioneered many of the
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
strategies used today, including the satisfaction-or-money-back guarantee on the entire range of his
pottery
Pottery is the process and the products of forming vessels and other objects with clay and other ceramic materials, which are fired at high temperatures to give them a hard and durable form. Major types include earthenware, stoneware and por ...
products.
He took advantage of his guarantee offer to send his products to rich clientele across
Europe
Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
unsolicited. The money-back guarantee was also a major tool of early U.S.
mail order
Mail order is the buying of goods or services by mail delivery. The buyer places an order for the desired products with the merchant through some remote methods such as:
* Sending an order form in the mail
* Placing a telephone call
* Placing a ...
sales pioneers in the United States such as
Richard Sears Richard Sears may refer to:
*Richard Warren Sears (1863–1914), founder of Sears, Roebuck and Co.
*Richard Sears (pilgrim) (1595–1676), early settler of Yarmouth, Cape Cod, Massachusetts
*Richard Sears (tennis)
Richard Dudley Sears (October ...
and
Powel Crosley Jr.
Powel Crosley Jr. (September 18, 1886 – March 28, 1961) was an American inventor, industrialist, and entrepreneur. He was also a pioneer in radio broadcasting, and owner of the Cincinnati Reds major league baseball team. In addition, Crosl ...
to win the confidence of consumers.
False claims
The use of money back guarantees has grown significantly over the last few years and has become standard practice in direct marketing across all media. Very often, unreliable businesses use it as a tactic to reel the customer into a false sense of safety. Many guarantees by sellers often fall outside the allowed scope of their merchant agreements with their banks. For example,
Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
and
MasterCard explicitly bar the seller from offering a money-back guarantee past 90 days from purchase.
Issues relating to false guarantees have become so common in the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
that the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
has specifically addressed the issue in the Code of Federal Regulations Handbook (§ 239.1).
Customer recourse
There are many ways customers can take action to pressure a company to stick to its advertised guarantee, such as contacting authorities.
See also
*
Returning
In retail, a product return is the process of a customer taking previously purchased merchandise back to the retailer, and in turn receiving a refund in the original form of payment, exchange for another item (identical or different), or a sto ...
*
Service guarantee
Service may refer to:
Activities
* Administrative service, a required part of the workload of university faculty
* Civil service, the body of employees of a government
* Community service, volunteer service for the benefit of a community or a pu ...
*
Wardrobing
Return fraud is the act of defrauding a retail store by means of the return process. There are various ways in which this crime is committed. For example, the offender may return stolen merchandise to secure cash, steal receipts or receipt tape t ...
*
Bank guarantee
A bank guarantee is a kind of guarantee from a lending organization. The bank guarantee signifies that the lending institution ensures that the liabilities of a debtor are going to be met. In other words, if the debtor fails to perform the obligat ...
References
External links
FTC Guide to GuaranteesBureau of consumer protectionBetter Business Bureau
Sales promotion
Contract clauses
Product return
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