Retailers tighten gift return

Returning the sweater that fit too tight and fighting after- Christmas sale crowds weren't the only aggravations for consumers returning goods to retail stores this post-holiday season.

Many returned items had to be accompanied by personal information, including a driver's license or address.

Retailers say they need the information to reduce fraudulent returns, which cost the industry more than $16 billion last year, according to the 2003 National Retail Security Survey, conducted by University of Florida criminology professor Richard C. Hollinger.

The average retail return rate was 8.58 percent. About 9 percent of all returns are estimated to be fraudulent.

Retailers are tracking returns and shortening the amount of time a return can be made to 30 or 90 days. Some apply store credit rather than a cash return and issue gift receipts - receipts without a price - with their merchandise, he said.

Melachy Kavanagh, spokesman for the International Council of Shopping Centers, characterizes return fraud as:

* customers returning stolen merchandise;

* customers using fake or old receipts when making a return;

* employees stealing items and returning them for cash; and

* customers buying an outfit, wearing it and returning it.

Some national chains, such as KB Toys, Staples, Express and The Sports Authority have begun tracking returns using software called Verify-1, a product of Irvine, Calif.-based Return Exchange.

A customer making a return allows his driver's license to be swiped in a Verify-1 machine, which records his name, address, birthdate and details about the merchandise such as price, location of sale, date and time in a Return Exchange database. The program records the type of transactions, the total amount of the returns and the number of exchanges each customer makes.

If a consumer's return history is erratic or above normal, the return is denied and customers are instructed to contact Return Exchange to clarify their return history before they are allowed to make a return at the store again.

Retailers are applying technology that helps them profile high risks, said Scott Krugman, a spokesman for the National Retail Federation.

They want to stop people who are manipulating the system and are not worried about the average person who had gotten a gift they didn't want or an item that didn't fit.

Gift receipts are a win-win situation for retailers and their customers, said Tracy Mullin, NRF chief executive.

Customers understand retailers have policies in place to make returns easy for their honest shoppers, but more difficult for those few who are trying to cheat the system. The last thing a retailer wants to do is alienate their customers, especially at this time of year, Mullin said.

Copyright 2005 Dolan Media Newswires
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