Being a business owner can be really fun!!! You get to do the things you love, meet really awesome people, work with cool clients, make your own rules, be your own boss.
It’s the dream for SO many people.
But what’s not talked about enough is the behind the scenes of what it really takes to be a business owner.
So often we see entrepreneurship being glamourized, and don’t get me wrong… YES, it’s amazing and you will have to pry me out of my home office to ever go back to a traditional 9-5.
While the good often does outweigh the bad, being your own boss comes with its fair shares of challenges (and sometimes tears) especially when it comes to handling client and customer disputes.
It doesn’t matter who you are or what you sell, you WILL have a bad apple at least a time or two in your business. That’s show biz, baby. It’s the way this whole business thing works.
It’s impossible to make everyone happy all the time and unfortunately sometimes your biggest task of the day as a business owner is dealing with an unhappy client or customer.
And even though it can suck, you don’t have to let it get you down! When you know HOW to respond in a way that’s legal and professional, you never have to worry about the bad apples.
So if you’re needing a little more confidence with your customer dispute communication, this blog post is for you! Keep reading for my best lawyer tips for how to handle conflicts, refund requests, or chargebacks in a way that protects your business and maintains your reputation.
Best Practices For Managing Client and Customer Disputes Legally and Professionally
Have a clearly stated and visible (!!!) refund policy
As a creative business owner running a digital product business, it’s extremely common (and legal!) to have a no-refund policy.
That’s not the problem at all. The problem lies within the way your refund policy is displayed.
If you want to truly get in front of refund requests, it’s your job to make sure that your refund policy is clear AND easily findable. I always recommend having your refund policy on the product pages, during checkout, and in your terms and conditions so that they’re visible all throughout the purchase process.
Not only is it important to make sure your refund policy is clear and visible, it’s also smart to explain the reason behind your policy.
If you run a digital product business, help your potential customers understand that because your products are instantly delivered and can be used right away, you can’t refund the items. Or if you run a creative business with customized items, explain that the items can’t be resold.
People are much more likely to be understanding if you’re clear with them on the reasoning and you can avoid a lot of unpleasantness later by being transparent about your policies now!
Know what chargebacks are and understand how to prevent them
In addition to refunds, chargeback requests are also a super common issue that business owners have to deal with and let me just say… they are NOT fun.
As a lawyer helping creative business owners, I often see that most people don’t even know what chargebacks are, which means they definitely don’t know how to handle them if or when they happen.
It’s for that reason that my BIGGEST tip is to fully understand what chargebacks are so that you can then know how to properly deal with them (and more importantly prevent them) when the time comes.
When it comes to chargebacks, the short of it is this: when someone initiates a chargeback, the card issuer or bank will investigate the claim and determine whether or not it’s valid.
Although there is an investigation before chargebacks are issued, in most cases it can be difficult to obtain tangible proof of validity, so oftentimes their financial institution will be on the side of their customer, believe that their claim is true and approve the request.
And this is where you as the business owner start to experience negative impact from chargebacks.
(I give a full spiel on chargebacks for service providers here and for digital product based businesses here.)
Because chargebacks go directly through their card issuer or bank, it can be a real hassle for you to deal with as a business owner with no real ability to manage things on your end, which is why prevention is KEY.
To prevent chargebacks from happening in the first place, I suggest making sure that your Terms and Conditions have a chargeback clause, use detailed product descriptions to manage customer expectations, and ensure checkout processes are secure and transparent.
Implement contracts from the very beginning to prevent confusion or misunderstanding
Service providers in the house, this one’s for YOU! Before you ever start working with new clients, I beg you to please implement contracts from the very beginning.
Your client contracts are THE thing that outline every single detail of the working relationship, including the scope of work, payment details, client and company responsibilities, cancellation policy, and much more.
There are few things worse than when you start working with a new client, things are going good, and then suddenly it begins…
“Oh, can you do this too?” “Can you deliver that thing early?” “Oops sorry, I’ll pay tomorrow.”
It’s a slippery slope that’s really not fun to deal with, so do yourself a favor and avoid these scenarios by implementing a clear contract right from the start!
Create a review response for positive AND negative reviews your business receives
Small business owners often thrive on word of mouth marketing, which means that reviews and testimonials are extremely important. But what happens when someone leaves you a BAD review? 🙄
Sometimes bad reviews are legit, but more often than not bad reviews stem from customers who are unhappy for a reason that simply falls in line with your policies – whether it be a refund issue, a timeline issue, etc.
As a business owner, you have a few options when you receive bad reviews:
- you could delete it altogether
- you could match their energy and respond in a negative way
- You could offer a refund or exchange to get someone to edit or delete their bad review
- OR you could simply have a curated review response that allows you to confidently respond to any review you receive – good or bad.
It probably goes without saying that I advise the latter!
Responding to ALL reviews as a business owner shows potential customers that you’re involved and that you truly care about the experiences of your clientele. This also gives you the opportunity to stand up for your business in the case of a bad review and explain your side of the story (with receipts if needed!) so that others can make their own judgement.
Conduct all client communication in a CRM so that everything is in writing (in case you ever need it)
Speaking of bringing receipts, one of the BEST things you can do for your business is use a CRM to conduct all client communication so that everything can be saved and organized in case you ever need to find it in the future.
This will serve you well in the instance that a client or customer claims one thing, but you had a conversion that proves otherwise.
Having things in writing is truly the solution to SO much when it comes to business ownership and can truly be the thing that protects you against various disputes, such as refunds, chargebacks, project details, and more.
Your One Stop Shop For Legal Education and Support
Overall, handling disputes with clients and customers is an inevitable part of running a business, but it doesn’t have to be overwhelming. By having clear policies, responding with professionalism, and documenting every interaction, you can navigate conflicts with confidence and maintain your reputation.
Since it can be such a tough thing to navigate as a business owner though, I’ve dedicated the December issue of The Legalzine to this very topic!
ICYMI, The Legalzine is a monthly digital magazine designed to make legal compliance accessible, actionable, and fun for online entrepreneurs, coaches, and creative business owners.
In the December issue, you’ll learn and receive:
- Legal-Approved Scripts so you can respond to negative reviews, refund requests, and more like a pro
- A Chargeback Guide with step-by-step instructions for managing disputes with your payment processor
- The Dos & Don’ts of Responding to Reviews so you have practical tips to manage feedback without breaking a sweat
- Monthly training to Learn How To Negotiate Disputes Like a Lawyer
- A fun quiz to test your dispute management skills and find out if you’re ready for the holiday drama
Each month covers a different legal topic and helps you put what you learn into real action to ensure that your business is truly protected from top to bottom!
Your subscription options include:
- Monthly Subscription ($40/month)
- Quarterly Subscription ($96/quarter – that’s $32/month + 1 month free per year!)
- Yearly Subscription ($288/year – that’s $29/month + 2 months free per year!)
CLICK HERE to choose the option that works best for you!
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Need something else? Send me a DM! Always happy to lend a legal hand when I can.
