When a customer approaches you as a supplier and asks for either a refund or some other solution to their concerns, it is important to know where you stand as far as the law is concerned. However, it's also worth considering how you should respond with a view to retaining their custom.
Legal obligations for returns
If you sell goods or services online, by telephone, by mail order or away from your normal trading premises, consumers may have a right to cancel a contract within a 14 day cooling off period and make a return. For more information see consumer contracts.
Legislation - in the form of the Consumer Rights Act - gives all consumers (but not other businesses) a right to a repair or replacement where goods turn out to be faulty.
First, you should establish your position and your customer's rights. See customers' rights to return goods.
If the goods are faulty, the customer is a consumer (rather than another trader) and has complained within six months of purchase, it's up to you to prove there was no fault at the time of sale. If you can't do that, you'll have to offer a refund or replacement. Even after six months, the consumer may still be entitled to ask for a repair or replacement.
If your customer is another business, you may still want to offer a refund, repair or replacement. Otherwise you may face a claim for compensation.
Good will gestures
You may consider offering returns even when you do not legally have to, eg when a customer changes their mind. You can create a returns policy that outlines your business’ rules for this type of return.
Remember that if you respond helpfully and professionally to a customer's complaint they'll be far more likely to deal with you in the future. For more information see manage your customer care.