Shopper Alert: Retailers Rejecting Customer Returns and Exchanges to Fight Fraud

Retailers are combating consumer fraud that costs them $16 billion annually by creating consumer return exchange blacklists. Retailers stand to lose $3.5 billion during the holiday season in returns and exchanges. The Return Exchange Company and retailers are creating blacklists by tracking consumer return and exchange behavior.

The return exchange blacklist is a list of consumers that have demonstrated abnormal, or fraudulent, return and exchange patterns. The list is created with the help of Verify-1 and Fraud Detection System software distributed by The Return Exchange Company. When a customer attempts to make a return or exchange, information from their driver's license is used to track their returns and exchanges. If they have exceeded the stores return and exchange limit they are denied future returns and exchanges.

Many consumers are unaware they have been blacklisted until their return or exchange is denied. The reverse boycott retailers are pulling on customers raises heckles on the backs of consumer rights advocates. Advocates' problem with using blacklists is that retailers are not clearly posting their return and exchange policies, but are burying them in the fine print at the bottom of store receipts. Amanda Sisenstein, project coordinator of the New York Public Interest Group, SUNY New Paltz Chapter, states, "there needs to be state legislation to increase consumer protection..." Consumers and advocates are clueless about return and exchange rejection criteria. Store return policies may also conflict with state laws. For instance, Massachusetts has a 3 "R" law- return, replace, or refund for any defective item regardless of store policy.

Sports Authority, Express, KB Toys, and Staples are a few of the increasing number retailers blacklisting consumers. Sears, Amazon.com, Home Depot, Circuit City, and Best Buy have instituted strict policies such as restocking fees, shorter return periods, and exchanges for identical items only- especially for electronics like digital cameras and computers.

The Return Exchange Company is a California based operation who began offering their services to retailers in 1999. It was a way to reduce fraud, and decrease the time it takes for a customer to make a return. Verify-1 software uses a customer's driver's license information to check past return behavior. It rejects returns from customers considered fraud risks. Receipt Verification software cross references a retailer's data with information on a receipt. It detects clerk error, fake receipts, and items that do not match the receipt.

The largest segment of fraud is ward-robing or renting. It is when a customer buys an item, uses it once or twice, and returns it for a refund. Ward-robing is most common amongst women returning special occasion dresses. The dress cannot be resold as new so it is sold at a discount. The lost money results in higher prices for consumers.

If a customer is denied a return or exchange they are given a phone number to call for a free report of their return and exchange activity. The Return Exchange Company claims they do not sell consumer information, share it amongst retailers, or with credit reporting agencies.

To avoid getting blacklisted but still have the freedom to return and exchange holiday gifts here are a few tips:

-Check store return policies before you purchase. If they are not posted ask an employee.

-Ask for a gift receipt

-Keep all receipts, tags, and packaging

-If you have a problem with returns talk to the store manager

-Know your rights