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I have always found "money back guarantees, no questions asked" a very strange concept that in most cases is just a scam (but I'm certain in the case of careers it's not).

But still I'm confused. Let's say that I have a company and I want to hire a lot of new employees. I subscribe for 6 months at a price of $6,000 and use the website every day.

After 3 months I hired over 10 employees. Then I ask for my money back. Since it's "no questions asked" you can't ask me why and you can't refuse (right?) even though I apparently found the service very useful.

Then I subscribe again, and then again I ask for the money back. Probably this won't work for the third time because someone will notice what I'm doing, but it's too late: I used for half a year a $6,000 service for free.

Am I missing something, or can people really do that?

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It's likely that they will ask. The money-back guarantee simply means that the money is not contingent on your answering the questions. –  devinb Jul 27 '10 at 13:41
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I usually just assume Mr. Spolsky knows more about making money than I do ... –  C. Ross Jul 27 '10 at 13:52
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@devinb: then it should be "no questions answered" instead of "no questions asked" =p –  Andreas Bonini Jul 27 '10 at 14:25
    
What does this have to do with Meta SO? –  Mechanical snail Feb 9 '13 at 4:46
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4 Answers

up vote 11 down vote accepted

Probably this won't work for the third time because someone will notice what I'm doing...

This is part of the reason why people don't do that.

After 3 months I hired over 10 employees.

This would be the other part. If the service works well, you're probably going to want to use it again, so you don't want to get your company blacklisted by scamming them.

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I'd have thought it would be the same as most software copyright infringment in that the people who abuse the system are the ones that wouldn't have paid anyway, and the extra cost for letting them use the system is probably fairly small and so even if you'll make a loss on those customers, you'll hopefully make that (and much more) up from the extra customers that are willing to pay for your service due to the guarantee.

Not to mention that some of the people cancelling might feel the pressure to produce some kind of reason some of which might be valid and so might give you some information that will help you improve your service.

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It's based on the belief that most people are ethical and will not actively lie in order to get something which isn't due to them (especially would not lie for the company they work for).

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Initial costs are a valid and important concern before using a service. By allaying those fears with a guarantee (of course, customers have to trust the guarantee, but there is some marketing/advertising laws involved), you can attract more customers than you would have otherwise. If you provide a good service, the additional revenue will surpass the costs of refunds.

And by costs, I include resources consumed (server time, technical support, etc.) by those customers. For example, you rarely see this type of guarantee with physical goods and physical labor; it's much easier to eat the cost of server time for the same software you'd run anyway.

It's also a marketing gimmick. Even the customers that take a refund turn into marketing as well: word of mouth, saying you honored your moneyback guarantee, and probably recommending it to others ("if you don't like it, just get your money back like me..."). Even someone who found no value at all in the service can't tell too horrible of a story if they got every cent back.

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