Bloggers,
I personally can’t imagine doing what’s described in this story as a common practice. How about you? Rachel Pritchett, business reporter
St. Petersburg Times via Scripps Howard
Derek Rodner calls them “returnaholics,” a breed of shoppers
costing the retail industry an estimated $10 billion to $15 billion
a year, according to the National Retail Federation.
They might buy a big-screen TV for the Super Bowl, a computer to
write a term paper or a dress for a special occasion, with no
intent to keep the item.
Return abuse has always been an issue, but the economy seems to
have intensified the problem, said Rodner, vice president of
product strategy at Agilence Inc., a retail loss-prevention
technology company.
“A lot of people who are otherwise honest are scrambling just to
feed their children but the reason for the return is not always
that honorable,” Rodner said.
In 2009, U.S. retailers reported losing an estimated $9.6 billion
due to return fraud and abuse, down from $11.8 billion in 2008,
according to the federation.
Joseph LaRocca, the group’s senior asset protection adviser,
attributes the decline in dollar losses to retailers reviewing
their return policies to better identify shoppers who abuse them or
are engaged in criminal behavior. Stores also are more clearly
explaining return policies, printing guidelines on receipts or at
the registers, he said.
Retailers expect a certain level of returns, but when fraud occurs,
it can seriously harm the retailer and affect consumers who have to
pay higher prices to offset costs, LaRocca said.
There are several types of return abuse. The bleak job market has
some struggling to make a few bucks, so they might buy items on
sale and then try to return them for a refund at regular
prices.
Returnaholics are often guilty of “wardrobing,” buying and
returning merchandise after a single use. This often applies to
clothes but can apply to other items, such as tools returned after
a job is complete.
“They’re definitely skirting the ethics boundary,” Rodner said.
Rodner calls another category of returnaholics “pointers,”
consumers who buy products just to get points offered by reward
credit cards. Typically, cardholders won’t lose the points if
they’ve already been applied to the account when the item is
returned, Rodner said.
Retailers lose more than profits when an item is returned. They pay
the credit card company a transaction fee at the time of purchase
and at the time of return. There are additional costs of
repackaging and restocking the merchandise. If it cannot be resold,
the sale is written off as a total loss.
These types of shoppers are definitely gaining from the system, but
it’s hazy as to whether they are actually committing a crime,
Rodner said. In contrast, there’s no question laws are broken when
someone plucks something off the shelf without paying and attempts
to return it.
Retailers often tout their hassle-free return policies, encouraging
customers to shop with confidence. Reluctant consumers might spend
fewer dollars when stores tighten their return policies and shorten
the return window.
In the past, few retailers required a consumer to show a receipt
for a return. Consumers are losing that freedom, Rodner said.
As of May 2009, Target changed its return policy to “increase
flexibility” for guests, said Sonja Pothen, a company spokeswoman.
Before then, customers without receipts could return two items that
cost up to $35. Target shoppers now can return an unlimited number
of items that cost up to $70 in one year without receipts, she
said.
The Home Depot customer can return any item with a receipt within
90 days for a full refund. After 90 days, he or she can bring it
back without a receipt and get store credit, said Kathryn
Gallagher, a company spokeswoman.
The home improvement retailer is also known for its lenient return
policy on plants. If a plant dies within a year, a customer can
bring in a receipt or the pot it was planted in and the store will
replace it, Gallagher said.
Return abuse is a concern, Gallagher said, but there are systems in
place that track how many times a customer makes a return and the
nature of the return. Most of the time, the store allows the return
to maintain the customer’s loyalty, she said.
“When you start hassling someone over something small, you’re going
to lose that customer,” Gallagher said.
“It doesn’t take much to tick off a consumer,” Rodner agreed.
Still, retailers need to protect themselves to stay in business,
and implementing return policies is one way to do it, he said.
Many retailers have started using software to track returns.
Agilence’s software highlights suspicious incidents so retailers
can pinpoint returns that exceed a certain value, are processed at
a particular time of day, or take place without a customer
present.
The software synchronizes a video of each product being scanned
along with product data. The ability to view both the receipt and
corresponding video is enabling retailers to spot fraudulent
activities that many times go undetected, according to Agilence.
For every dollar spent on the software, retailers see a $6 return,
Rodner said.
