If a customer prepaid for services and has a balance, are we required by law to refund or can we make them use the credit for future purchases?

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If a customer prepaid for services and has a balance, are we required by law to refund or can we make them use the credit for future purchases?

Asked on July 5, 2012 under Business Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You can only charge customers the actual cost of goods or services. If the services ended up costing less than anticipated, then you would have to provide a refund unless the customer had agreed to accept a future credit instead. Nothing says you can't offer the customer something to sweeten the deal (e.g. an extra 10%) if they will agree to take the excess balance as a credit rather than cash refund.


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