How to Handle Collections & Refund Requests: The Secret for Keeping the Money & Keeping Your Customers Happy

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“Maiko, there was a client who just called up the office really angry, demanding a refund.  He was really angry & rude yelling at me the whole time...  What do we do?!!!  I didn’t know what to say, so I just told him someone will get back to him… He wasn’t happy to hear that…”


Clearly, the person who took the call was caught off guard and was shaken up by what she had to go through.

Before going any further, let me paint a picture here.

In this particular case, the person who called angry isn’t my client.  That is my client’s client.  Nonetheless it is a huge deal.


Because here, we aren’t talking about a mere $195 refund.  If it were, I would be saying, “Please don’t waste my time with it.”  How about 100x that?

Yep, try $19,500.

What if this happens to YOU?

What would be your first reaction?

Let me guess, right about now there are hundreds of scenarios running through your mind a mile per second. Am I right?


“How do I NOT refund this guy?  What are my options?”

“How much would I be able to keep?”

“What if we don’t have any choice but to give the money back?!!! We don’t have any room for this!”


If this happened 10 years ago, this kind of news would put me in a panic attack for 5 min. My heart would be racing with an immense amount of stress. Since then, I’ve handled countless non-payment and refund cases over $30K+ per pop. 

So nowadays, my usual response is:

“Alright. Get me all the intel about him.”

See, ideally no business owners should get to this point without doing due diligence to consistently weed out clients from hell. At the same time, though, even with the best intention & strategy, we aren’t completely immune to this kind of incident from time to time.

Here we are.  What's done is done.  There’s no going back. 

So, what do we do now?  What would YOU do?!

In this post, I am going to share some of my techniques that can be used for both collecting fees from dead beat customers (customers gone M.I.A.) and refund requests especially for high ticket items. 

This will allow you to spend less energy and still get the maximum results.

What’s not to like? 

Well then, let’s dive in.


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5 Key Elements of Successful Collections & Dodging Refund Bullets

My intention is for you to have enough tools to get started.  For this reason, I narrowed down my list of tools to just 5. 

Easy enough, right?  Here are the 5 elements:


1.     Neutrality

2.     Intel Gathering

3.     Acknowledgement

4.     Silence

5.     Let It Be Their Decision


These are the must-have elements if your main goal is to keep (or collect) the money while still keeping your customers happy. 

“This is almost like having your cake and eating it, too.  Is that even possible?!”

Yes.  It is possible.

By the way, these are NOT in order.  You need all of these elements to be doing the work for you throughout the process.  So, make sure that you don’t consider this to be a step-by-step process.  I just had to emphasize this before moving forward.


Now that this bit is sorted, let’s cover each element.


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Repeat after me: “Everything is arbitrary.”

No, really.  I do want you to say it.  “Everything is arbitrary.”

I’ve touched on this subject in my posts, “How to Overcome “No Budget” Objections” and “7 Surprisingly Easy Steps to Handle Difficult Conversations with Ease”

The same rule applies here. 

You are panicking because you are too focused on potential (emphasis on “potential”) losses.  This can also be explained as the “starting from scarcity mindset.”

If you start your problem solving from the place of lack, a.k.a. potential losses, you’ve already lost this game.

Whatever reasons or threats customers are claiming, those are just their stories.  There are many ways to look at the triggering incident.  The incident that pushed them over the edge. 

Whatever they think is “fair” or “unfair” is arbitrary.  If you allow yourself to get sucked into their stories, you lose.

So, if you find yourself too emotionally raw to handle this, you must take a step back and say, “I’m neutral.  Everything is arbitrary.”

Keep in mind, I’m not labeling these customers as “bad guys.”  There were cases that turned out horribly, but in most cases, that wasn’t my client’s intention or fault per se.  Regardless, those cases had to be resolved somehow. 

On the flip side, I have witnessed cases of customers trying to be crafty and deceitful, their true intent being “not to pay” from the beginning. This happens a lot with the agency business model where customers will cut you out of the deal.

Once the issue has surfaced and been brought to your attention, realize that there is so much you don’t know about what happened.  This is the very reason there is absolutely no need to jump to any conclusions.

That’s the reason my reaction to “angry customers” always is “Alright.” 

With this response, I have no particular feelings to what was brought up. It’s not good. It’s not bad. It just is.  It exists now and it needs to be resolved. 

That is all.


Intel Gathering

“We always have leverage.”

In the book Never Split the Difference, the author & ex-FBI hostage negotiator, Chris Voss, clearly states that we always have leverage regardless of how dire the situation may seem.  I must say I’m thankful for not having to deal with hostage negotiations for a living. That is negotiation on steroids. 

By the same token, you can say that, if this works for hostage negotiation, it can be applied to business negotiations.  You got it right.  Now retired from the FBI, Voss leads his negotiation consultancy firm, Black Swan Group Ltd, to offer his insights to business leaders. 

But knowing we always have leverage to be part of the system for negotiation is only the first step to keep yourself neutral.  What we now need is the actual intel (evidence) to spot what leverage we have to play with.

In every single case I handle, I request all email threads from the team so that I can review them.  Back in the day, I discovered a big flaw with the business I was helping with.

“Sorry, Maiko.  It was a series of phone conversations.  I don’t have anything to show you.”

“What?!  Are you saying you didn’t do any “recap” emails?!”

If you don’t document any sensitive communications in a written format, i.e. emails, you don’t have any grounds. The only path that lays in front of you would be the “He said. She said.” path.  The path to nowhere.

So, if your primary communication with your customers is verbal, I highly encourage you to start doing recap emails now if you have not done so already.

When I don’t have anything to read though, that doesn’t give me a free pass.  I still need to help them solve this refund problem.  In this case, I focus on asking questions that reveal this customer’s behaviors from the beginning to the end, trying to spot red flags. 

While I conduct interviews with the employee who was involved with the case, I always keep in mind that, “This is just one side of the story.”  Once again, I’m only gathering intel.  I have no opinions, no feelings, and no judgement. 

“What time of the day was it?”

“How was his reaction to the news?”

“How long did he take before he got back to you?”

“When did his communication slow down?”

“Who else is influencing his decision making? (Or who is paying the bill?)”


Do your best to find every bit of signs that may reveal his thinking process, as well as his emotional state. 

You might ask, “Intel gathering seems extensive.  How much time do I have to do all of this?”

Glad you thought about it.  My answer is, “Plenty.”

This is because I let the team know to tell the refund requestor, “The case has been elevated to the higher level.  A call must be scheduled in advance.” 

I let the team handle scheduling of a call that can easily take a few emails going back and forth.  This serves 2 purposes that I am going for:


1.     Buying some time to do intel gathering,

2.    Creating a buffer of time for him to calm down.


Once I feel I gathered as much as I could, I’ll have my notes with 3 sections:

1.     Known knowns

2.     Known unknowns

3.     Unknown unknowns.


A call is now scheduled. I’m ready with a list of unknowns to keep in mind so that I can continue intel gathering while I speak to the refund requestor




“Labeling” is the concept widely used both in the world of persuasion and negotiation.  Robert Chialdini, the author of Influence: The Psychology of Persuasion and Pre-Suasion Revolution suggests this technique to build a rapport. 

This is to frame what your counterpart is feeling.  I often use the following:

“That must have been infuriating for you.”

“So, you feel disappointed.”

“And… that gave you a sense of hope.”

“In the gist of it, that’s not what you expected.”


Think about yourself for a second.  I’m sure you have a few examples like this.

You feel dissatisfied with something you purchased, and you’ve described the situation in detail to a customer relations rep., but all you got were some logical and rational explanations like, “This is our company policy” or “That’s now how our system works.”  How does that make you feel?

Not being understood, right?  So, you grow angrier. 

That’s what you can avoid by acknowledging how your counterpart is feeling.  One thing I would add to this technique is, “Be sure to make it sound as authentic and natural as possible.” 

This is because this technique has been so popular for the past 30 years, anyone under the sun – sales people, parents, hagglers, M&A negotiators- are keenly aware of it, and it is hitting the “fatigue point.”  The last thing you want is for your counterpart to know what you are doing.

When someone does this to me in a painfully obvious way, I’m not shy to point that out. 


“Are you labeling me?”


Yikes, you don’t want to put yourself in that position.  Remember, you are neutral.  You are not “trying” to sway anything or anyone, especially in the beginning.  Not to mention, you don’t even know whom you are dealing with.  Imagine dealing with me, you might be walking straight into a trap because I will use that against you!!!

Then you will remember Mike Tyson’s quote, “Everyone has a plan until they get punched in the mouth.”

That’s when “Late Night DJ Voice” comes in handy.  This is one of Chris Voss’ recommended technique.  If you use this calming tone of voice not particularly interested in enticing your counterpart, then it will come across as genuine and seamless.

Actually, I go as far as to say use “Discovery Channel Narration Voice.”  While you see a scene of a male lion savagely devouring a gazelle, all you hear is, “Now he gets the reward he’s been waiting for after several days.” 


It’s a fact.  You do it with confidence, not with your people-pleasing voice.


Once you break the ice with acknowledging your counterpart’s emotional state, you are now in the “open season” for more intel to gather.  Be sure to let your counterpart do the talking. 

Lastly, let me be clear that “labeling” has nothing to do with you buying in to your counterpart’s story. In other words, you are NOT agreeing with whoever you are dealing with.  There is a huge distinction.

If you proceed without clarifying this fact, you will find yourself becoming completely wrapped up by all the sob stories they come up with.  As a result, you just gave them a chance to conceal the very truth they want to hide that you could have leveraged.  (Remember, it takes two to tango.  It takes 2 parties to make a deal fall apart.)



Humans are programmed to please others, excluding of course some outlier exceptions, such as people with Asperger syndrome, heavily analytical data-driven people, and some contemplators. (I, for one, am a cross between data-driven and contemplative.) 

This is why we are all so uncomfortable with silence in any social settings.

But if you take my advice to assume a neutral position, despite a lot being at stake, you shouldn’t be too concerned about breaking the silence. Instead, leverage it

These are the occasions when you can use silence as a tool:


1.     When you ask an open-ended question to make your counterpart think.

2.    When you give them your answer. 

3.    When you propose a new direction. 


Silence is effective in 2 ways:


1.     Show that you are calm and firm without being perceived as over-confident.

2.    Let your counterpart do the work.


While you want to build a pattern or a theme throughout your conversation with your counterpart, you do not want him/her to build his/hers.  Effective use of silence keeps your counterpart on the course you want him or her to be on. 

It is so tempting to come & aid by adding a few more words.  But resist the temptation!

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Let It Be Their Decision

No one wants to be told what to do.  More or less, I’d say.

Depending on personality, there are a few different degrees with this.

But one thing is for sure.  When it comes to someone demanding a refund or refusing to pay, he or she certainly does not want to be told what to do.

What you want to aim for throughout your interaction with your counterpart is to make any decisions you want to be theirs.  You let them own your ideal decision as their own. 

This is a bit of an advanced technique, but I don’t see a successful closing of any collection or refund issues without this element.

Newbie business owners are so eager to entice their leads, they often make mistakes by guaranteeing an outcome that they cannot guarantee, especially when their leads ask, “What’s my ROI by hiring your company?” 

“Oh, we can totally do XYZ to make $X for you!”

What?!  You can’t do that.  No, you don’t want to do that!  Now that becomes YOUR goal that you don’t even know you can honor.

Dealing with collections and refund requests are similar to this in a sense that you don’t want to say you are the one guaranteeing whatever outcome you want, let alone dictating how it is going to roll out.  Instead, by asking a series of questions, your aim is for your counterpart to declare the outcome you want. 

Confusing?  Here’s a sample example (modified.)

Me: “Whether we like it or not, we are here. (laugh) I’d hate to see this go south, how about you?”

Counterpart: “No, I want to make this work. It’s going OK so far.  Just not 100% sure.”

Me: “What do you see as the best route to take?”

Counterpart: “As I said before, I think it’s fair for me to be able to pay this at a later time on a payment plan.”

Me: “You want to be sure this arrangement works, and you need more time.”

Counterpart: “Exactly. The previous arrangement was disastrous.”

Me: “Luckily, you caught it early, and you made no payment for that. Correct?”

Counterpart: “Right. But I don’t want to get into the same situation.”

Me: “Is there anything you’ve witnessed that suggests it is not going to go well?”

Counterpart: “No. So far, so good.” 

Me: “How long do you think it’ll take for you to make a decision?”

Counterpart: “Ummm… 2 more weeks would do.”

Me: “The start date of this arrangement was when?”


Counterpart: “In the beginning of this month.”

Me: “2 more weeks will make it a full month. That’s 4 weeks. I’m afraid I can’t do that.”

Counterpart: “How about a week more?”

Me: “That’s fair. By then you would be able to make a commitment to the decision you are about to make. A full payment will be due then.”

Counterpart: “That’s fine.”

This is exactly what I was aiming for. Just one extra week and no installment plan.  The key here is that he suggested it. Not I.

There was a lot more involved with the handling of this case.  Additionally, this case wasn’t handled well from the beginning, so I opted for a compromise, even though this was clearly against ST&C (standard terms & conditions.) 

Instead of pointing out breach of contract, I chose collection. 

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Conclusion: You Can Be Right or You Can Keep the Money

The biggest enemy for collections and avoiding refunds is your urge to be right.  Ditching it altogether will get you much closer to the place of neutrality.  Being neutral will allow you to focus on what your customers are saying, which will let you gather intel, then gain leverage.

It is understanding that you may feel wronged or feel the right to point out the flaws of your customers. 

When you feel that way, consider what your ultimate goal is.  This is where “You can’t have your cake and eat it, too” comes in.  You can’t demonstrate how right you are and keep the money.  But you can keep the money and keep your customers feeling like they were treated right. 

Do you want to be right?

Or, you want to keep the money?

Your choice.

Interested in learning more about successful scripts and additional techniques that are not covered here?  Feel free to comment below & let me know!