Jeff Green Partners

Stores Get Stingy About Returns

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Kaitlin Pitsker/Kiplinger’s Personal Finance—As you’re double-checking your holiday shopping list, tack on a reminder to read each store’s return policy before making your purchase. Some retailers are feeling a little less generous when it comes to returns. That even includes REI, an outdoor gear and sporting goods retailer long known for its no-time-limit and no-questions-asked return policy. The store recently trimmed its return window to one year, unless the merchandise is defective. To deter “wardrobing” — the practice of buying, using and then returning a product (usually clothing) for a refund — Bloomingdale’s recently began tagging some of its apparel with conspicuous plastic tags. If a tag is removed, shoppers can’t return the item.

Stingier policies are intended to combat return fraud. Last year, fraudulent returns cost retailers $8.9 billion, according to the National Retail Federation, $2.9 billion of which occurred during the holiday season. Reports of wardrobing increased 40% from 2009 to 2012, says the NRF.

Customers can expect tougher return policies to spread. “As retailers see competitors or stores with some of the most lenient policies tighten up, it’s going to signal to them that they can do the same,” says Phoenix retail consultant Jeff Green. “We’re going to see a shift toward a shorter, 30-day return policy in 2014.” Customers can also expect added scrutiny when taking back merchandise without a receipt.

Retailers want to identify the bad actors. To do so, some companies are gathering data on customers who return merchandise, watching for suspicious patterns and warning or denying repeat offenders. Clerks may ask for state-issued identification, such as a driver’s license, before you can make a return. Nearly 10% of retailers require ID for returns made with a receipt, and 73% require ID for returns made without a receipt. Some scan the ID into their own system; others send the info to a third party. If you exceed a retailer’s limit for the number of returns within a given time frame or for the value of returned products, you could be denied more returns for a period of time (typically 90 days). If you are given a warning or denied a return, the Retail Equation, a company that collects return information for 27,000 merchants in North America, will provide you with the information in its return-activity report over the phone. To request your report, visit www.theretailequation.com/consumers.

Despite the general trend toward Grinchier return policies, some retailers are giving shoppers a break during the holidays or when shopping online. Last year, 10% of retailers relaxed their return policies for the holidays, and similar promotions are expected this year. Lenient online return policies and acceptance of returns in stores for items bought online will likely continue. Look for free shipping for both purchases and returns, which Neiman Marcus debuted in October.

As policies shift, the key to hassle-free returns will be staying organized. The ReturnGuru app, free for iPhone and Android, lets you snap pictures of your receipts, then saves them and reminds you as the deadline approaches to make returns. The new rules may take some getting used to. But if you expect great deals, that’s part of the trade-off.