The impact of crisis-induced changes in refund policy on consumers’ brand trust and repurchase intention

Abstract

This research conducted two studies to unravel how the interplay of polarity of change in refund policy (positive vs. negative), the magnitude of change in refund policy (high vs. low), and refund format (cash vs. credit) on consumers’ perceived trust of the company and repurchase intention. Study 1 shows consumers’ trust of the company and repurchase intention were higher (lower) when the company changed refund policy positively (negatively) during crises. A high magnitude of change amplified the positive (detrimental) impact based on the positive (negative) change in refund policy on consumers’ responses. Study 2 demonstrates the interplay of the polarity of change in refund policy and refund format. The positive (detrimental) impact produced by a positive (negative) change in refund policy was amplified when a cash refund was offered. The same effect was attenuated by a credit refund.