Retail Return Policies Tighten Up

Retailers are changing their return policies to target customers who abuse more liberal return policies and combat return fraud that costs them $16 billion annually. Penalty restocking fees are being implemented, particularly on electronics, home appliances, tools, lawn and garden items, and automotive items.

Retailers are identifying specific items or categories where they suffer the most fraud, according to Joseph LaRocca, vice president of loss prevention for the National Retail Federation, speaking to the Baltimore Sun. Good examples are electronics such as camcorders and digital cameras for the Christmas holidays, prom dresses in May, or Halloween costumes in October.

Edward Fox told the Seattle Post-Intelligencer, “Restocking fees are more prevalent in consumer electronics because the merchandise tends to become obsolete very quickly. Fox is a marketing professor at Southern Methodist University’s Cox School of Business.

Most stores are extending their usual 30-day return limits for Christmas. The Baltimore Sun reports that Best Buy will allow purchases, made between November 1 and Christmas Eve, to be returned by January 24. Items, such as computers, have to be returned within 14 days of purchase, while more common items, like digital cameras, must be returned by January 8.

Individuals who abuse the returns systems are becoming targets. The Baltimore Sun reports that cash registers at Wal-Mart automatically target customers returning more than three items without receipts or within the 45-day period and then a manager must approve the return. There is a six-month reset period before any tracking disappears. J.C. Penney uses a database for tracking returns, especially for those returning items without a receipt.

Verify-1, created by The Return Exchange, is a subscription database. Stores, such as the Sports Authority and the Express division of Limited Brands, subscribe to it. When a customer returns an item at a member store, the returner’s driver’s license is scanned into log, creating an inventory of that shopper’s returns to one or multiple store locations. If the system’s “rules and statistical models” are triggered, the return is denied. Anyone whose return is denied may request a report of their return activity history by e-mail.

Jonathan Dampier, vice president of marketing and corporate strategy Newgistics, told the Baltimore Sun, “You can’t treat everybody as a fraudulent purchaser, but the more information you have about your returns, the better you can control it.” Dampier estimates that 9 percent of all returns are fraudulent, although returners represent only 1 percent of all consumers. Newgistics is a technology company that helps retailers and other businesses manage returns.

The National Retail Federation suggests that you know a retailer’s return policies before purchasing and keep all receipts to ensure refunds can be given, according to the Seattle Post-Intelligencer. You should also provide all original packaging, especially when returning a gift. Those receiving gifts that they are going to return, should also ask for receipts in order to simplify the return process. reports that when returning items purchased online, you are responsibile for knowing the process, including who pays the return shipping costs. You should also ensure that you are sending your returned item to the correct return address. Some online retailers may have a physical store in your area that will make it easier for you to return or exchange your item, if the retailer allows onine purchases to be returned to physical stores.

Consumer attorney and founder of Edgar Dworsky, told the Baltimore Sun, “I understand that there’s a big problem with return abuse but the percentage of consumers who are honest consumers and may change their minds about a good – those are the ones I’m concerned about.”

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.