How to write a return policy for online store owners: the clauses to include, US rules and a sample policy

Short answer: A good return policy for an online store answers six questions in plain words: how many days the customer has, what condition the item must be in, which items can't be returned, how the refund is paid, who pays return shipping, and how fast the money comes back. Write it as a short page, link it from every product page and from checkout, and make sure it matches what you actually do. In the US, there's no single federal return law for delivered goods, but some states, such as New York, require you to post your refund policy where shoppers can see it before they pay. Returns also cost money, so price them in: run your store on an e-commerce platform that shows the profit left on every order after shipping, and check what each return really costs you.

Do you have to accept returns?

Mostly, that's your decision. The FTC's Mail, Internet, or Telephone Order Merchandise Rule is the main federal rule for online orders, and it covers shipping times and refunds on orders you can't ship, not returns of items that already arrived. Under it, if an order is cancelled because you can't ship it, you must refund payments made by cash, check, money order or a third-party credit card within seven working days, and you can't hand out store credit instead.

What you do have to get right is disclosure. New York's General Business Law § 218-a is a clear example. A retailer must post its refund policy conspicuously; online, that can be a notice next to the item or a notice shown before billing information is requested, including through a link. The policy has to say whether you give refunds and on what terms: sale or "as is" items, proof of purchase, time limits, cash or store credit, and any fees, stated in dollars or as a percentage. If you don't comply, a buyer can claim a cash refund or credit, at their choice, for up to 30 days from purchase, as long as the item is unused and undamaged and they can show proof of purchase.

Other states have their own rules, so check the consumer protection office in the states where most of your customers live.

The clauses every return policy needs

1. The return window

State a number of days and when the clock starts: "30 days from delivery" is clearer than "30 days." The FTC tells shoppers that many stores stop taking returns after a set time, like 30 or 90 days, so either is a familiar choice.

2. Condition of the item

Say what "returnable" means: unused, with tags, or simply undamaged. If customers must open the box to try the product, don't require sealed packaging.

3. What can't be returned

List exceptions by name, not with "some items." Common ones are personalized or made-to-order goods, final-sale clearance, gift cards, perishable items and hygiene products such as earrings or swimwear once opened. The FTC notes that sellers often have different policies for sale and clearance items, so if your final-sale rule differs, put it in the policy and on the product page.

4. Refund, exchange or store credit

Say how you pay the money back: to the original payment method, as store credit, or as an exchange. The FTC observes that sellers are often more willing to offer store credit than a refund. That's fine, as long as you say so before the purchase, except for orders you cancel because you couldn't ship them.

5. Who pays return shipping

This is the clause shoppers look for first, and the FTC lists it among the questions they should check before buying. Pick one rule and write it down:

• Free returns — Who pays: You; Works best when: High margins, fit-sensitive products like apparel
• Customer pays — Who pays: Customer; Works best when: Low-priced items, low margins
• Free for exchanges, paid for refunds — Who pays: Mixed; Works best when: You want to keep the sale in the store
• Free if the item is faulty or wrong — Who pays: You, only for your mistakes; Works best when: Almost every store, as a minimum

If you pay, a prepaid label is the easiest experience. USPS, for example, lets businesses give customers prepaid return labels with scan-based payment, so you're charged for the labels that are actually scanned, with no minimum yearly return volume. Customers can drop the parcel at a Post Office or collection box or use Package Pickup. Return postage belongs in your shipping math, the same way outbound postage does in how much to charge for shipping.

6. Restocking or other fees

If you charge a restocking fee, state the amount in dollars or as a percentage, and which items it applies to. New York's rule explicitly expects fees to be stated that way.

7. How to start a return

Give the steps: where to request a return, what to include (order number, item, reason) and whether they need your approval before sending.

8. Refund timing

Say when the refund is issued, for example "within 5 business days after we receive the item," and that banks may take a few more days to show it. Keep that promise: the FTC tells shoppers they can dispute a card charge for a defective item or one they never got, by writing to the card issuer within 60 days of the first bill showing it.

Where to show your return policy

Put a "Returns" link in the footer, one line near the price on product pages ("Free returns within 30 days of delivery"), a link at checkout before payment details, and the link to start a return in the order confirmation email. Visibility isn't just about rules. Shoppers who can't find the policy, or don't like it, leave before paying; we cover that and other checkout fixes in how to reduce cart abandonment.

Sample return policy for an online store

Adapt this to your products and your state's rules. Amounts and days are assumptions.

> Returns and refunds. You can return most items within 30 days of delivery for a refund to your original payment method. Items must be unused, with tags attached. We can't accept returns on personalized items, gift cards or items marked "Final sale." To start a return, email us with your order number and the item you're returning; we'll reply within one business day with a return address. Return shipping is $6.50, deducted from your refund, unless the item arrived damaged or we sent the wrong item, in which case we send you a free prepaid label. We issue refunds within 5 business days after the item arrives back with us; your bank may take a few more days to show it. Exchanges for a different size are free. You can ask us for a written copy of this policy.

Know what returns cost you

Add up what one return costs: outbound shipping you won't get back, return postage if you pay it, packaging, restocking time and items you can't resell. Example (assumption): a sweater with $6 outbound shipping and a $7 prepaid return label costs you $13 in shipping when it comes back. If one in ten orders comes back, that's $1.30 per order to build into your prices. Review return reasons monthly: frequent "too small" returns point to a size chart problem, not a policy problem.

How Favenda helps

A return policy only works when your numbers support it, and Favenda keeps them in view. Each order shows real profit after shipping and payment costs, so you can see what free returns or free shipping really cost you. You set shipping rates by weight or by size and add a free shipping threshold, so delivery costs are clear before checkout. Each sales region gets its own currency, payment methods and shipping rates, so buyers in each market see options that fit them. Reviews come only from verified buyers. There are no transaction fees on your sales, and hosting, SSL, backups and updates are included. The Store plan is $69 a month excluding tax, with two months free when you pay annually.

See Favenda →

FAQ

Do online stores have to offer refunds?
Generally, accepting returns of delivered goods is the store's choice in the US, but you must follow your own posted policy and your state's disclosure rules. In New York, for example, a store that doesn't post its refund policy as required can be held to a 30-day cash refund or credit. If you cancel an order you can't ship, the FTC rule requires a refund.

Can an online store refuse a refund?
Yes, if the refusal follows a policy the customer could see before buying, such as a final-sale item or a request after the return window. Refusing a refund for an item that arrived broken or wrong is risky: the customer can dispute the charge with their card company.

What is a good return policy for a small business?
A clear one that you can afford: a 30-day window from delivery, a short list of exceptions, refunds to the original payment method, free returns at least for damaged or wrong items, and a stated refund time.

Sources: New York State Senate, General Business Law § 218-a; Federal Trade Commission, "Business Guide to the FTC's Mail, Internet, or Telephone Order Merchandise Rule"; FTC Consumer Advice, "Solving Problems With a Business: Returns, Refunds, and Other Resolutions" and "Online Shopping"; USPS, "Return Services". All read on 30 October 2026. The sample policy and examples are assumptions; this article is not legal advice.