Retailers keeping closer tabs on returns
Retail therapy is but one technique that a consumer may utilize to brighten his or her disposition or to serve as a reward after a long day. And if the therapy went a bit overboard, the consumer may opt to return items he or she didn’t want or need without a second thought.
But now some retailers are using third-party firms, including The Retail Equation (TRE), to keep tabs on customers’ returns, limiting the amount of returns they can do. The reasoning behind it: Retailers are trying to stem the tide that is merchandise return fraud/abuse (returns or exchanges of stolen merchandise to secure cash or buy products and use them without intending to keep them), which accounted for an estimated $22.8 billion in retail losses in 2017. TRE has been in business since 1999 to help retailers identify the 1 percent of consumers whose behaviors mimic return fraud or abuse, according to Lisa Mendenhall, a representative of TRE.
The way it works, per TRE’s consumer site: When a consumer tries to make a return, a retailer will scan the receipt into a system then compares variables such as return frequency, dollar amounts and/or time against a set of prescribed rules that form that particular retailer’s return policy. If a return is denied or flagged, a customer is informed by the store to contact TRE for a personal history of return/exchange transactions that lists what stores that person has returned items to and, for each return, the date and time, whether he or she had a receipt or not, and the dollar amount — all factors that can determine if a store accepts a return. The report doesn’t prohibit consumers from ever making returns at a certain retailer, but the system could prevent a consumer from returning for a period of time at a particular store.
TRE is used in more than 34,000 stores across the country, including retail chains such as Best Buy and Home Depot — complaints have been expressed for both chains via social media, forcing some consumers to rethink whether to shop there in the future.
Larry Dixon, of Oak Park, Ill., is one customer who endured a flagged item around the holiday season. He called TRE and was told that he can’t return anything to that store for a year. Dixon hasn’t shopped at that store since.
“Why would I shop someplace knowing that I’m stuck with an item that I don’t want?” he says. “It’s my money, you can’t tell me
what I have to keep and what I can return. That’s not fair to me.”
Customers may feel services such as TRE are unfair, but retail experts are saying the industry is in a “Catch-22” situation. Retailers are trying to strike that balance of minimizing theft and fraud in their stores, protecting their legitimate customers and responding to societal factors like law enforcement budgets that don’t allow police departments to respond to every shoplifting or fraud case, according to Lisa LaBruno, senior vice president of retail operations for the Retail Industry Leaders Association in Arlington, Va.
“The Retail Equation’s tool is just one innovative technology that retailers are trying to leverage because retailers are in a new environment — there’s a new normal now where they’re not able to rely as much on law enforcement, and organized retail crime gangs are finding new ways every day to commit large-scale theft and fraud against retailers, and we’re having to stay ahead of that,” LaBruno says. “It seems lately that everything retailers try to do to appease the stakeholders is criticized. Retailers are constantly trying to strike that balance of stopping theft and fraud, and treating their legitimate consumers fairly, partnering with law enforcement and recognizing that they have budgetary constraints as well. It’s a constant battle for retailers.”
Dixon filed a complaint, but Stephen Holmes, senior director of corporate communications for the Home Depot, says he’s not aware of numerous complaints from consumers about the home improvement store’s use of TRE.
“We only use TRE for nonreceipted returns,” he says. “We’ve been known for years for having one of the most customer-friendly return policies. Most people assume if you don’t have a receipt, you can’t take it back, but we haven’t gone to that level.”
Bianca Jones, a Best Buy representative, says of the stores that utilize TRE, Best Buy is “only about 1,000 of those.” When asked about complaints and how the service is affecting the bottom line, Jones shared the retailer’s prepared statement about TRE questions: “Customer service is at the heart of how we’ve restored Best Buy over the past several years. That includes helping customers return products tens of millions of times each year. On very rare occasions — less than one tenth of one percent of returns — we stop what we believe is a fraudulent return. Fraud is a real problem in retail, but if our systems aren’t as good as they can be, we apologize to anyone inappropriately affected.
“We will take a hard look at what we’re doing and determine how we can make it better.”