Maneuvering through Christmas gift returns

November 28, 2004|by JULIE E. GREENE

TRI-STATE - Was the sweater too small?

Did the color of the ottoman not match that of the chair?

Is the new VCR just not working right?

Many retail stores allow customers to exchange or return items for cash or credit.

However, return fraud has led to new innovations and policies at some retail stores in recent years, industry officials said.

Some retail stores keep track of people who frequently return items and some stores charge a restocking fee.

Retail stores lose $16 billion a year from return fraud in the United States, said Ellen Tolley, spokeswoman for the National Retail Federation in Washington, D.C.


Retail fraud includes shoplifting, forging receipts and people wearing merchandise and then trying to return it, Tolley said.

One of the biggest components of crime fraud are organized crime rings that manufacture receipts, she said.

Retailers also are affected when shoppers make excessive returns because it affects the store's operating costs and inventory levels, Tolley said.

Someone shopping for a red sweater in a specific size for the holidays might not be able to find it because someone else bought it with the intention of returning it, she said.

The factors some retail stores look at are the frequency of returns, the number of items returned, the dollar amount of those items and the number of stores within the chain where items were returned, Tolley said.

Tolley said 99.9 percent of consumers won't be affected by return tracking systems. Retailers use them to curb dishonest behavior in order to keep prices low for loyal shoppers, she said.

If the ability to return an item is important to a shopper, that consumer should ask about the store's return policy before buying merchandise, Tolley said. Some retailers extend the time limit for returns during the holiday season so items can be returned after Christmas, she said.

Among a select number of retailers tracking people who excessively return merchandise are KB Toys, The Home Depot and Lowe's, company officials said.

This past spring, KB Toys began subscribing to a software service called Verify-1 through The Return Exchange to protect KB Toys from fraudulent and abusive returns, KB Toys spokesman John Reilly said.

Abusive returns could include a customer with a high rate of return who "borrows" merchandise, Reilly said. For instance, someone buys a video game to try it out for the day, only to return it because it wasn't fun, Reilly said.

If someone who has made an excessive amount of returns tries to return another item, the cashier will get a message that the return is denied and the customer is informed to call The Return Exchange with any questions, Reilly said.

For the average KB Toys customer, the return process is seamless, Reilly said. A small percentage of returns are fraudulent, he said.

The Return Exchange in Irvine, Calif., did not have anyone on Wednesday that could comment on the record about how the company tracks returns.

According to, the company is contracted by retailers to gather their return information, including information from a consumer's ID, and analyze the data to develop and follow return policies for the retailers.

Being denied a return does not mean the consumer's return was fraudulent or abusive, according to The Return Exchange. The Web site states "it merely means that the consumer has requested what the retailer considers excessive returns."

Lowe's tracks returns by payment method and by person, company spokeswoman Chris Ahearn said.

"As long as the customer has a receipt, there's never an issue," she said.

Customers without a receipt are asked for identification and get a merchandise card with credit, Ahearn said. That way, the money has to be spent at Lowe's, she said.

If it appears someone is taking advantage of Lowe's return policy, a return could get flagged, Ahearn said. Ahearn didn't think the company had refused a return for someone who got flagged, but couldn't say it hadn't happened.

The Home Depot tracks returns using a computer system, corporate spokesman Don Harrison said.

"There are people who will make a pretty good living returning products into The Home Depot by picking up receipts in the parking lot. You pick a receipt up in the parking lot and bring it into the store, go get the product and bring it back to the return desk," Harrison said.

Harrison said that kind of fraud is not unique to The Home Depot.

The company's return tracking system is not designed to cause honest people problems, he said. Harrison would not say how the system works.

Approximately two years ago, some companies started charging restocking fees when customers return items, Tolley said. The fees are usually associated with electronic items.

Restocking fees help retailers cover the cost of repackaging the item and returning it to the shelf for resale, Tolley said.

"Nobody wants to buy merchandise that's already been purchased, whether sheets or a DVD player," Tolley said.

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