Shoppers Face End of Generous Retailer Return Policies

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John Gress / Reuters

It’s getting more difficult to return stuff, even at stores renowned for their phenomenally generous, no-questions-asked return policies. You can thank the few bad apples who have habitually abused return policies for that.

A good return policy is beneficial for retailer and customer alike. Consumers  benefit when they can quickly and easily return items that, for whatever reason, they realize they don’t want after taking them home from the store. Consumer psychologist Kit Yarrow wrote that a retailer’s return policy is incredibly important because shoppers “feel the retailer-customer relationship is just that—a genuine, personal relationship—and that a violation of trust via a bad return experience can ruin this relationship forever.” Stores can not only build up goodwill and customer loyalty via a generous return policy, the comfort of such a policy boosts sales because countless customers who are on the fence about a purchase buy more often when they know they can return the item without hassle.

As a pair of retail experts put it in a Wall Street Journal story from a few years back:

Discouraging returns with policies like strict time limits or only partial refunds, as many retailers do, is a mistake. That’s because customers who know they can return anything they buy, no questions asked, for a full refund are likely to buy more than shoppers who are afraid they might get stuck with something they don’t want or lose money on the return.

(MORE: Why a Good Return Policy Is So Important for Retailers)

Nonetheless, retailers today are increasingly feeling it is necessary to toughen up return policies in order to limit losses caused by a small percentage of consumers who abuse them. The official return policy at Bloomingdale’s, for instance, now stipulates that any merchandise that’s returned should be brought back to stores “With Bloomingdale’s b-tags and designer garment tags still attached.”

This is a significant change, Bloomberg News recently reported. Bloomingdale’s has reportedly begun keeping such tags on garments in prominent positions even after they’ve been purchased to stop customers from “wardrobing.” That’s the term used by the National Retail Federation for “the return of used, non-defective merchandise like special occasion apparel and certain electronics.” In a typical situation, a “wardrober” will buy a pricey dress, wear it to a fancy event—and then return it soon afterward, price tags still attached.

The phenomenon isn’t limited to clothing. Consumers have admitted to buying things like big-screen TVs and boogie boards and returning them after they’ve served their brief purpose—perhaps, respectively, for watching the Super Bowl and catching some waves on a vacation.

Outdoors retailer REI has traditionally had one of the most generous return policies imaginable, in which there was no time limit on returns, and in which customers could return goods in any condition—ripped, burned, simply worn down from years or use, whatever. It’s this return policy that had some saying the company’s initials stood for “Rental Equipment Inc.,” according to the Seattle Times, in a story published over the summer noting that the return policy would henceforth be limited to one year after the date of purchase. (Another variation for REI: Return Everything Inc.)

(MORE: 6 Tips for How to Return Almost Anything)

Just like at Bloomingdale’s, REI felt forced to make its return policy less generous due to the actions of a small percentage of return abusers. Last year, a well-known climber confessed on Outside magazine’s website to a history of fraudulently returning counterfeit REI gear to an REI store to get cash for more outdoor adventures. “What we found is that small group of folks who are probably extending the policy beyond its intent, is getting bigger,” REI’s Tim Spangler told the Seattle Times, explaining why the policy had to change. “And it’s not a sustainable thing long-term if we want to maintain this fantastic policy.”

The Wall Street Journal highlighted some of the more egregious examples of return chutzpah from the old days, including backpacks and climbing suits returned three decades after they were purchased and sandals brought back because they were reportedly “not sexy enough.”

Retailers know that making return policies stricter will turn some customers off. That’s not entirely a bad thing, though. “They are going to alienate customers that abuse the policy,” Marie Driscoll, of the retail consulting firm Driscoll Advisors, told Bloomberg News, discussing changes at Bloomingdale’s. “And I don’t think that is so bad.”

The hope among retailers is that the changes scare off bad customers. This bunch obviously includes criminals: At a National Retail Federation roundtable discussion this past summer—which featured panel members from Bloomingdale’s, by the way—industry players talked about the hot new scam involving returning stolen goods without receipts to stores in exchange for gift cards (which can be sold online for cash). But stores may also want so-called “serial returners” to take their business elsewhere too. An Associated Press report published in August revealed that big retailers such as Home Depot, J.C. Penney, Victoria’s Secret, and Best Buy have been using technology that tracks the “return activity” of shoppers. And if a customer’s return profile indicates he returns too much or too often, he may be banned from returning items for a spell, or simply be asked to leave the store for good.

(MORE: 10 Big Retail Trends from the 2012 Holiday Shopping Season)

Not all retailers are following the trend of toughening up return policies, however. L.L. Bean, Orvis, and Bloomingdale’s upscale competitor Nordstrom are sticking with their well-known, exceptionally generous policies. This may benefit them in the coming months. While a store’s return policies affect shopping decisions year-round, they’re especially important during the winter holiday shopping period—which is not only the height of gift-giving, but which, not coincidentally, is the peak time for returns as well.