A money-back guarantee, also known as a satisfaction guarantee, is essentially a simple
guarantee
A guarantee is a form of transaction in which one person, to obtain some trust, confidence or credit for another, agrees to be answerable for them. It may also designate a treaty through which claims, rights or possessions are secured. It is to ...
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 indu ...
pioneered many of the
marketing
Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce.
Marketing is usually conducted by the seller, typically a retailer or ma ...
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 raw materials, which are fired at high temperatures to give them a hard and durable form. The place where such wares are made by a ''potter'' is al ...
products. He took advantage of his guarantee offer to send his products to rich clientele across
Europe
Europe is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the west, the Mediterranean Sea to the south, and Asia to the east ...
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 an order by telephone call
...
sales pioneers in the United States such as
Richard Sears and
Powel Crosley Jr. 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 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 (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
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) United States antitrust law, antitrust law and the promotion of consumer protection. It ...
has specifically addressed the issue in the Code of Federal Regulations Handbook (§ 239.3).
See also
*
Returning
In retail, a product return is the Action (philosophy), process of a customer taking previously purchased merchandise back to the retailer, and in turn receiving a :wikt:refund, refund in the original form of payment, exchange.
Overview
Many ret ...
*
Service guarantee A service guarantee is a marketing tool service firms have increasingly been using to reduce consumer risk perceptions, signal quality, differentiate a service offering, and to institutionalize and professionalize their internal management of custom ...
*
Wardrobing
*
Bank guarantee
A bank guarantee is a kind of guarantee from a lending organization. The bank guarantee also 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 o ...
References
External links
FTC Guide to GuaranteesBureau of consumer protection
Better Business Bureau
Sales promotion
Contract clauses
Product return
{{retailing-stub