Return Policies for Retail Establishments

Retail Council position

Oppose legislation that would limit any merchant’s right to craft and enforce its own policies relative to the returning and/or exchanging of merchandise, including the use of electronic methods to track returns by consumers.

Legislative action

Lawmakers introduced two separate bills over in 2007 addressing retail return policies.

•The Retail Council continues to monitor A.6890 (N. Rivera), which would require posting of a notice if a retailer tracks a customer’s returns;

•The Retail Council opposes A.5255 (Perry), which would require a store to disclose whether it uses electronic tracking of returns, would prohibit certain restrictions against the return or exchange of merchandise, and would allow for local laws to supersede;

Neither passed the Assembly, nor were they introduced in the Senate.

• At a glance
• Return abuse by some consumers and organized retail thieves has become a multi-billion dollar enterprise, with the retail industry losing more than $16 billion annually because of fraudulent returns.  This is atop the $37 billion cost of organized retail theft in 2006, according to industry estimates.
• Legitimate retailers would rather not impose strict return policies, but certain safeguards now are necessary to protect merchants against excessive losses and return fraud perpetrated against them.
• Return fraud tactics include the use of stolen or “found” sales receipts, counterfeit sales receipts, counterfeit UPC symbols — all used to return stolen merchandise to the store from which it was originally stolen or from another store within the chain of stores.
• Available tracking software allows a retailer to use objective measurements and standards to evaluate whether to accept a customer’s return.  Software seeks certain identifiable patterns of excessive returns and is not designed to reject the returns made by legitimate customers who wish to return items that they do not want.  Retailers using tracking devices deny up to 90% fewer returns from their customers than do retailers who do not use such software.
• Protecting consumers’ privacy, tracking software ensures that a customer’s return experience in one store is in no way available to other merchants.
• Because return practices differ for each merchant, each must retain the right to craft return policies that best fits its own business model and its own experiences with its customers.  No merchant wants to alienate its customers - but no merchant today can afford to allow fraudsters to perpetrate unabated this costly form of organized retail theft.