Algorithms May Be Preventing You From Returning Purchases

How are retailers limited returns?

Consumers return unwanted or non-functional items to online and brick-and-mortar stores every day. Many people don’t think twice about their ability to return purchases if they do not work out for them. However, several large retail stores are now using a new system that may make it more difficult for consumers to return products. Retailers use a new system to “score” customers’ shopping behavior and impose limits on the amount of merchandise they can return. According to NBC, Retailers like Amazon or Walmart have been opening up their return and exchange policies in recent years to be more attractive to customers. However, these practices have had an adverse effect. Some people exploit the open system to commit fraud or even to get money for drug purchases.

How does it work?

A consumer analysis firm based in California called The Retail Equation is monitoring how often consumers return an item. The firm furnishes these reports to national retailers. The stores may block a consumer from returning items if they decide the consumer is abusing the privilege. The reports are intended as a defense against fraud according to the Retail Equation’s website.

While this service is meant to catch scammers or fraudsters, there are problems with the system. There are many reports of consumers being wrongly targeted. The Wall Street Journal reports that a Best Buy customer from California returned cell phone cases on three different occasions, causing him to be targeted in one of The Retail Equation’s return reports. The consumer told a reporter that he was banned from making returns at Best Buy for a year. There may be privacy concerns, as well – consumers may have accepted their buying habits being tracked if retailers only used that data for market research and other fairly innocuous purposes, but this is a different animal altogether.

Company representatives say the system is designed to “identify the 1 percent of consumers whose behaviors mimic return fraud or abuse.” The National Retail Federation (NRF) states that fraudulent returns are a significant problem for retailers after every holiday season, when there is a surge in returns.

According to The Retail Equation, fraudulent returns cost retailers more than $22 billion a year. The most common forms of return fraud involve returning stolen merchandise to a retailer to receive cash. To make these schemes profitable, it’s necessary for a scammer to make multiple returns. Retailers say they’re just trying to clamp down on the tens of billions of dollars lost each year in fraudulent returns –but consumers may feel they’ve been unfairly caught in the crossfire.

Retailers all have different return policies. Some are designed to make it easy for customers to return a product that’s the wrong size or wrong color. Some retailers make the process a bit more difficult than others. Walmart’s website notes that it accepts returns of most items purchased in a store within 90 days. However, exceptions include computers, most cameras, and most electronic items. Those must be returned within 15 days of purchase. Walmart also requires all of the original packaging materials as well as the receipt. Target says most unopened items in new condition that are returned within 90 days will receive a refund or exchange. Like Walmart, Target has exceptions that it says will be noted on the receipt. The company also says merchandise that has been opened, damaged, or does not have a receipt may be denied a refund or exchange. L.L. Bean, the company with what may be the retail world’s most famous return policy (they once promised lifetime returns) recently rolled back their program dramatically due to some abuses of the program.

What can consumers do?

Consumers may be well served by getting familiar with a store’s return policy before making a purchase. If you’re denied a return, you can request a copy of your Return Activity Report on the company’s website. However, The Wall Street Journal states that the report does not include the specific purchase history or behavior or other information used to generate a score. It also does not show what the actual numerical score is or why a specific consumer received a temporary return ban. However, consumers can appeal and ask the company to lift the return moratorium.

Photo by from Pexels

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