Whether you are running a brick-and-mortar store or you are only selling virtual goods over the Internet, it is important that you clearly lay out your company’s return and exchange policy. Some customers may not be completely satisfied with your product or maybe they just don’t need it anymore. How do you handle this?

On the one hand, you can try to avoid as much fraud as possible and offer a no returns policy. This way, any money that comes in through the door will not leave if a customer tries to return something. All sales are final and you don’t have to deal with that side of the business. The downside of this is that some customers may choose not to shop at your store at all, because they want to have the assurance of being able to return their purchase if needed.

On the other hand, you can have a very lax return and exchange policy, guaranteeing your customer’s satisfaction. This way, if the customer is not happy with their purchase for any given reason, they know that they can come back and return it. The upside is that this can improve the customer experience, but the downside is that you are potentially opening yourself up to fraud and massive losses.

What approach do you think is better in the long run? Is customer satisfaction worth the risk of the occasional fraudulent return? Or would you rather not bother with returns at all?