Playbook: Handle a Refund Request

TL;DR

• Under $25: Refund immediately. The cost of investigation exceeds the transaction value.
• $25-$500: Check order details, then decide within 24 hours. Speed prevents chargebacks.
• Over $500: Investigate, but communicate with the customer within 4 hours.
• Every refund request you handle well is a chargeback you prevented. A refund costs ~3% of the transaction. A chargeback costs $50-175+.
• Empower your support team. Agents who can refund without escalation resolve requests 3x faster.

Step-by-step guide for when a customer asks for their money back. The goal: resolve it before they call their bank.

Workflow Overview

Phase	Key Tasks
Receive	Log the request, acknowledge to customer within 4 hours
Assess	Pull order details, check for fraud signals, review history
Decide	Refund, partial refund, deny with explanation, or escalate
Resolve	Process refund, confirm to customer, update records

When to Use This Playbook

• Customer emails, calls, or chats asking for a refund
• Customer posts a complaint on social media
• You receive a pre-chargeback alert (Ethoca, CDRN, RDR)
• Customer's bank contacts you before filing a formal dispute

Step 1: Receive and Acknowledge

□ Log the request with timestamp, channel, and customer ID
□ Acknowledge receipt within 4 hours (same business day)
□ Use this template:

  "Hi [Name], I received your request about order [#].
   I'm looking into this now and will follow up within
   [24 hours / 1 business day]."

□ Do NOT ask the customer to "wait while we investigate"
  without giving a timeline

Speed Matters

Customers who don't hear back within 24 hours are significantly more likely to file a chargeback. Every hour of silence increases your risk.

Step 2: Assess the Request

Pull the order details and check these signals:

□ Order details:
   □ Transaction amount
   □ Order date and delivery date
   □ Product/service delivered?
   □ Digital or physical goods?

□ Customer history:
   □ First-time or repeat customer?
   □ Previous refund requests? How many?
   □ Previous chargebacks?

□ Fraud signals:
   □ Does the request match the order? (e.g., "never received" but tracking shows delivered)
   □ Multiple refund requests in short period?
   □ Pattern matches known friendly fraud?

□ Timing:
   □ Within your posted refund window?
   □ If outside window, how far outside?

Quick Decision Matrix

Amount	Customer History	Fraud Signals	Action
Under $25	Any	None	Refund immediately
Under $25	Any	Suspicious	Refund (not worth investigating)
$25-$100	Good	None	Refund immediately
$25-$100	Good	Suspicious	Investigate, decide in 24h
$25-$100	Bad (repeat refunds)	Any	Investigate, decide in 24h
$100-$500	Good	None	Refund or partial refund
$100-$500	Any	Suspicious	Investigate, decide in 24h
Over $500	Good	None	Verify details, refund in 24h
Over $500	Any	Suspicious	Full investigation

Step 3: Decide

Option A: Full Refund

Use when:

• Amount is small (under $25-50 for your business)
• Customer has a legitimate complaint
• Product was genuinely not delivered or defective
• You're outside the return window but the request is reasonable

□ Process refund through your processor dashboard
□ Refund to original payment method (required by most processors)
□ Send confirmation email with refund amount and expected timing
□ Note: Refunds take 5-10 business days to appear on customer's statement

Option B: Partial Refund

Use when:

• Customer used part of the service before requesting refund
• Product was partially delivered or partially defective
• Shipping costs were incurred that can't be recovered
• You want to retain some value while satisfying the customer

□ Calculate fair partial amount
□ Explain the breakdown to the customer before processing
□ Get customer agreement before processing (email confirmation)
□ Process and confirm

Option C: Deny with Explanation

Use when:

• Strong evidence of friendly fraud (confirmed delivery, usage logs)
• Request is clearly outside policy and unreasonable
• Customer has a pattern of abuse

□ Prepare evidence (tracking, delivery confirmation, usage logs)
□ Respond with specific reasons, not just "policy says no"
□ Offer alternatives: exchange, store credit, partial refund
□ Document everything in case this becomes a chargeback
□ Save all communication for potential representment

The Alternatives Save You

Even when denying a full refund, offering an alternative (store credit, exchange, partial refund) prevents 40-60% of chargebacks that would otherwise follow a denial.

Option D: Escalate

Use when:

• Amount is large and circumstances are ambiguous
• Customer is threatening legal action
• Request involves a product safety issue
• You need manager approval per your internal policy

□ Inform customer of escalation and revised timeline
□ Escalate with full context (don't make the next person start over)
□ Follow up within the promised timeline

Step 4: Resolve and Follow Up

□ Process the decided action (refund, partial, denial)
□ Send confirmation to customer with:
   □ What was decided
   □ If refund: amount and expected timing (5-10 business days)
   □ If denied: clear reasoning and alternatives offered
□ Update customer record with outcome
□ If this was a pre-chargeback alert: respond to the alert
□ Flag patterns for review (is this product generating lots of requests?)

After Resolution: Prevent Repeats

After every 10 refund requests, review for patterns:

□ Are refunds clustering around a specific product?
□ Are refunds clustering around a specific timeframe (e.g., 30 days post-purchase)?
□ Is your refund policy clearly visible before checkout?
□ Are your billing descriptors recognizable? (Check: would a customer
  recognize the charge on their statement?)
□ Are confirmation and shipping emails being sent and received?

Measuring Success

Metric	Target	What It Tells You
Refund response time	Under 24 hours	Speed of customer resolution
Refund-to-chargeback ratio	3:1 or higher	Are you refunding before customers dispute?
Repeat refund rate	Under 5% of customers	Are you attracting serial refunders?
Refund rate	Under 2% of transactions	Overall refund volume health

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See Also

• Refund Strategy - The math behind refund vs. fight decisions
• Refund Policy Design - Building a policy that prevents chargebacks
• Chargeback Prevention - Stop disputes before they start
• Billing Statement Names - Fix unrecognized charges
• Chargeback Alerts - RDR, Ethoca, CDRN pre-dispute alerts
• Representment - When the customer disputes anyway