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Refund scams

Posted by Michael Bloch in web marketing (Wednesday February 11, 2009 )

The promise of a refund is a great conversion tool, but one that some merchants are abusing.

I’ve written in the past how the marketing power of refunds are sometimes used inappropriately and deliberately, but one tactic that didn’t dawn on me until recently was the use of inflated handling delivery charges.

It works like this: the merchant is selling a shoddy item for $5 and the item usually sells for $10. It seems like a bargain in itself and it hooks unwary shoppers. The more savvy know the deal seems to good to be true and are suspicious, so the merchant also offers an iron-clad refund guarantee as a sweetener. The handling and freight is costing the merchant $5, but they charge $15.

In a refund situation, the refund usually applies to the goods only, so the merchant refunds $5 to upset customers without quibbling and still makes cash. This usually occurs with very cheap items otherwise the freight costs would certainly not be able to be substantiated as they would be far higher. Additionally, people are more likely to let a refund slide on a cheap item they’ve purchased.

To some, this approach would seem to be a shrewd business approach and entirely ethical as no real lies have been told. It’s a shame that some merchants feel that the definition of good ethics is what you can get away with – it only makes it harder for the straight-shooting ecommerce merchants out here to succeed in what is already a tough environment. The unethical exploitation of a legitimate conversion tactic only serves to dilute the power of the strategy as a consumer once bitten is usually twice shy.


Lies, damned lies and online marketing


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