
How Your Returns Are Used Against You at Best Buy, Other Retailers - QUFB
https://www.wsj.com/articles/how-your-returns-are-used-against-you-at-best-buy-other-retailers-1520933400
======
nathantotten
I frequently shop at Home Depot. Last year I was remodeling my bathroom and I
had some extra parts (unused) and I went to return them. I was mistakenly
flagged by Retail Equation and several of the things I was returning were
denied. It was extremely frustrating as I had bought thousands of dollars of
merchandise and was literally trying to return less than $40 of stuff.

I asked to talk to the store manager, she said there was nothing she could do.
To me, the real problem with these systems is that relying on them too much
removes the ability for people to provide good customer service.

Fortunately for me, I don't give up so easily. I guessed the email address of
the CEO of Home Depot and wrote him. The next day the VP of Loss Prevention
called me and then called the store. They let me return my merchandise the
next time I tried. ;)

~~~
bluGill
Home depot has a real problem (I assume all retail does - my sister works Home
Depot returns so I hear stories) with people who go into the store grab
something, leave, then come back (perhaps to a different store) and return it
"I don't need it". It is often obvious to the clerk this is what just
happened, but how do you prove it?

~~~
TheSpiceIsLife
Simple: in Australian we require proof of purchase. Typically the receipt from
the store you bought it from, and the item must be returned to _that store_.

Australia’s largest home / hardware store also checks the items your taking
against your receipt and stamps your receipt upon exiting the store, thereby
reducing the incidence of thieves walking in empty handed and taking the item
again while claiming they’ve already paid for it.

Why doesn’t Home Depot do something similar?

~~~
bruce_one
That doesn't provide 100% of the picture though.

Assuming the "largest home / hardware store" means Bunnings, this w/e I
returned items to a different store but with a receipt - so that was simple,
but different to what you've stated.

Not long ago I return $175 worth of goods without receipts (after return $300
with receipts, because apparently I lost some...) to a different store to the
one I bought from. They checked my ID and I assume I'm now on their loss
prevention records; but from what I know that's not likely to be an issue
until there's an obvious pattern of abuse.

Bunnings definitely have people returning items that they've stolen from one
store and returned to another without a receipt, but they have a loss
prevention team to try and reduce that.

It's the trade off of reduced friction (and increased purchases) vs theft - eg
I wouldn't have bought everything I did if I was concerned that the returns
process wouldn't be seamless.

~~~
duncan_bayne
Anecdotal evidence to be sure, but I've had only excellent experiences with
Bunnings staff on both returns and warranty claims.

------
noonespecial
Is this behavior stated explicitly in the store's return policy? If not, that
sounds a little like fraud. Its a kind of bait and switch: "Shop with
confidence because of our awesome return policy!... _except for you, we don 't
serve 'your kind' here_"

~~~
gruez
Of the examples given in the story, all of them mentioned a "warn" before
being unable to return. So it's not as if they weren't given advance notice.

~~~
pavon
The story wasn't clear of whether just future purchases would not be allowed
to be returned, or if they were banned from returning anything (including
previous purchases) after the warning.

~~~
gknoy
The text of the warning seemed to indicate that, for the next 365 days, no
returns would be allowed. I suspect that is intended to be interpreted as any
returns, even if it were for something already purchased.

------
gregmac
This is actually one of the major advantages retail still has over online
purchases: returns to online providers require paying for shipping, and the
initial shipping costs aren't refunded either. Even with 'free shipping', the
cost of shipping + everyone else's returns is just built in.

That said, this seems like just bad policy that leads to the problem. Why
should stores allow returns without a receipt or other proof (lookup using
credit card)? That seems to be the major issue. If they require proof of
purchase, it means they at least aren't refunding theft or products purchased
from other stores.

Accepting returns of opened but non-damaged product that can't be resold (eg:
missing parts/packaging, obviously used, etc) also seems to be opening
themselves up to abuse. Of course, how they handle this has to take into
consideration the fact that easy returns are a competitive advantage. This is
maybe where the analytics firm can step in, to help identify people that
frequently do this.

~~~
chrishas35
I did a return on Amazon last week where not only was there no shipping
charge, but I didn't have any additional expense...box, label, time, gas, etc.
They scheduled UPS for the pickup, and the UPS driver brought the label with
them.

~~~
kileywm
Not all returns are free with Amazon. Generally speaking, there needs to be a
defect or error on the part of the seller (ex: listing has incorrect info) in
order for it to be free. If you classify your return as "No longer need this
item.", then the shipping amount will be deducted from your return, in my
experience.

If you return a lot of items and it's repeatedly defective/incorrect
info/<whatever makes return shipping free>, then you'll probably be flagged
just like Home Depot is doing.

~~~
cortic
In the UK we have the Distance Selling Act;

[https://www.gov.uk/online-and-distance-selling-for-
businesse...](https://www.gov.uk/online-and-distance-selling-for-businesses)

"You must tell the customer they can cancel their order up to 14 days after
their order is delivered. They don’t need to give a reason for cancelling. If
you don’t tell the customer about their right to cancel, they can cancel at
any time in the next 12 months."

So it would be illegal for Amazon to remove the right to return items bought
online.

The Tories (currently in government) seem to have added a lot of exemptions to
this; like the dumb £42 limit (they really don't like poor people) but it
still carries some protection, And if the government hadn't also knackered the
legal aid system it could be enforced at the small claims court level too...
oh well.

~~~
FireBeyond
That's not removing the right to return items, you're misunderstanding.

They're saying you can return items, and if the reason is defect or problem,
then they can (as they should) wear the cost of that.

They're also saying that you can return an item, "because I don't like it/want
it", and that's no fault of theirs, so you're free to return the item, but the
cost of doing so is (and should be) yours.

------
avs733
"You could do things that are inside the posted rules, but if you are
violating the intent of the rules, like every item you’re purchasing you’re
using and then returning, then at a certain point in time you become not a
profitable customer for that retailer,”

Uh...I'm not a lawyer but I really don't think that interpretation of contract
law would hold up in court. They offered a contract to purchase an item, the
consumer accepted it. Making that contract then reliant on their intent rather
than whats written seems a pretty obvious violation of Contra proferentem...am
I nuts?

~~~
gweinberg
Most likely the contract doesn't require them to accept returns at all.

~~~
avs733
I think that is a really anti-consumer way to read this:

[https://www.bestbuy.com/site/help-topics/return-exchange-
pol...](https://www.bestbuy.com/site/help-topics/return-exchange-policy)

~~~
grkvlt
From the actual link [0]

Like many retailers, we use a third party to help prevent losses by detecting
improper returns [...] Reimbursements on returns lacking proof of purchase may
be denied or limited and state sales tax and fees will not be reimbursed.
[...] If we caution you or deny your return, you may request a copy of your
Return Activity Report by calling 1-888-224-1920

So, they don't promise to unconditionally return items. I wonder what a
'Return Activity Report' looks like?

0\. [https://www.bestbuy.com/site/help-topics/return-exchange-
pol...](https://www.bestbuy.com/site/help-topics/return-exchange-
policy/pcmcat260800050014.c?id=pcmcat260800050014)

------
gascan
I guess as long as it's implemented well it will never matter to anyone who
isn't a cheat.

But as one of countless time-strapped homeowners who can't remember if he
needs a 5/8" widget or a 1/2" widget, I frequently buy both and return the
extra at a later date. I can only hope I don't get flagged. Frankly it's a big
part of the value of shopping at a local retailer.

~~~
Domenic_S
Non-cheat here who got hit by best buy. I returned a Surface Pro and some
other stuff -- they took it back but flagged me for no returns. So I stopped
buying stuff there.

~~~
shawndellysse
I had a similar experience. I bought an open-box sound bar for my tv, got home
and unboxed it to find that the sound bar was DOA and the serial number didn't
match the box.

I had bought it from a Best Buy about an hour from my home, and tried to
return it, with receipt, to the Best Buy 15 minutes from home since I had
bought it on a Sunday afternoon and wanted to return it same day if possible.
I was told I had to bring it back to the original store since the serials
didn't match; okay great Best Buy didn't do it's job checking serials when
whoever had this item before me return-swapped it, but sure I'll go out of my
way.

I bring it back to the original store and they then tell me I'm on the no-
return list from that time for 120 days. I've since stopped shopping at Best
Buy.

~~~
gascan
That one's sort of understandable. Bad circumstance for everyone. Best Buy
didn't do their due diligence, but you very clearly _could_ have been the
fraudster pulling the swap rather than the hapless victim.

------
Splines
The amusing thing is that retailers are going to have the data that shows this
works. Return fraud will certainly go down.

What they're not going to have is data on the people who choose not to shop at
these stores because of this policy, both those who have been incorrectly
identified as fraudsters and those who just don't want to bother with the
hassle.

~~~
megy
> What they're not going to have is data on the people who choose not to shop
> at these stores because of this policy,

Why won't they have that data? They will certainly know if sales have gone
down, and they can try it out in different areas to remove other factors.

~~~
frenchie14
Because sales has thousands of variables at play and this is just one. It
won't be possible to attribute the degree of the loss of sales to a single
variable.

------
neonate
[http://archive.is/Swq7X](http://archive.is/Swq7X)

~~~
ct0
the key to the pay wall is in the above link. thanks

~~~
parliament32
I'm getting a paywall and there doesn't seem to be a key in the link.

~~~
softawre
It seems to be based on referrer. You can save the article to Pocket, open
Pocket, click "go to original", and bypass.

------
gknoy
So, in order to prevent fraud, companies like Best Buy contract out to
companies like Retail Equation to evaluate (and deny) returns. While I can
appreciate why they feel it's necessary, this seems like the kind of thing
that credit card chargebacks were made to combat.

~~~
larrik
Exactly, I would expect this to be a 100% legit chargeback case, which is
going to hurt them in the long run.

~~~
ben509
From their policy: [https://www.bestbuy.com/site/help-topics/return-exchange-
pol...](https://www.bestbuy.com/site/help-topics/return-exchange-
policy/pcmcat260800050014.c?id=pcmcat260800050014)

"Like many retailers, we use a third party to help prevent losses by detecting
improper returns, and, except where prohibited, require a valid ID for all
store returns that lack proof of purchase. Reimbursements on returns lacking
proof of purchase may be denied or limited and state sales tax and fees will
not be reimbursed."

And the Visa guidelines for chargebacks, page 28 lists the reason codes:
[https://usa.visa.com/dam/VCOM/download/merchants/chargeback-...](https://usa.visa.com/dam/VCOM/download/merchants/chargeback-
management-guidelines-for-visa-merchants.pdf)

My read puts Best Buy on solid footing here. If you're just returning it
because you're unsatisfied, Visa doesn't seem to consider that valid for a
chargeback. If it's defective and you have proof of purchase, you had enough
evidence that BB would accept the return.

~~~
mindslight
They would be on shaky ground with credit cards, which is why these terms
state they only apply when "proof of purchase" is lacking - a CC purchase has
intrinsic proof of purchase.

Where this surveillance system has become a major pain in my ass is returns
over 90 days at Home Depot. The last period I had intensive HD purchases, I
could count on returning stuff [0] late that I'd rather not stock, eating the
sales tax, and then spending the store credit. Now it's be sure to return
within 90 days or plan on keeping it to not end up flagged.

Also, I have personally stuck black tape [1] over the serial number and the
barcodes on my drivers' license. When asked to show ID, this lets me exercise
judgment about whether the rarer bits are revealed. This is especially handy
at unknown liquor stores where the cashier will not have the courtesy to even
ask before swiping your license in an electronic reader, backhauling it into
the surveillance matrix.

[0] Unopened, new condition, completely resalable.

[1] Sharpie-colored masking tape. Electrical tape tends to be transparent to
IR!

~~~
sjruckle
Not to detract from your overall point, but electrical tape isn't transparent
to IR. Quite the opposite, in fact.

It doesn't matter though, because the scanners don't use IR. They use a red
laser which is in the visible spectrum. Any tape that visibly blocks the
barcode will work.

~~~
mindslight
Well then, I must have been unlucky with the brand I attempted to use as a
flag for an opto interrupter - it definitely passed enough IR for the thing to
not trip.

And yeah, red lasers are quite common. But that doesn't rule out the
possibility of a reader using IR - my experience with the opto left me
paranoid on the matter.

~~~
sjruckle
I mean, a flag that moves in front of an ir sensor might not work if the light
can leak between the flag and the sensor housing. Also, not all sensor
housings are sealed from behind. Some of them are just a tiny folded-metal can
that have gaps at the edges. It really depends on the configuration of your
setup.

Unless the tape has holes, though, you can consider it opaque. Actually,
because it absorbs and blocks ir, it's often used as a target for infrared
temperature measurement of difficult-to-measure objects.

~~~
mindslight
This was many years ago, so I don't remember the exact details besides it
being one of those basic black plastic housing straight-through ones. I had
been surprised because the quite-black electrical tape turned out to be
seemingly transmissive. I probably solved the problem with something equally
hacky, like sandwiching a piece of plain paper between the folded over tape,
or perhaps a bit of metal.

If it blocked say 90% of IR, it would congruent with both of our points. I'll
have to investigate further - it would make a much simpler ID mask.

(hm. Just did an experiment with two IR remotes and it did appear to block for
the most part. One of the remotes worked really close up, but I can't easily
rule out leakage or some other type of coupling.)

------
unstatusthequo
Great idea, brick and mortar retail. That looks ought to help speed up your
Amazon-sponsored demise. Amazon's return policy is so flexible it sets a very
high bar for customer service

~~~
ConceptJunkie
Amazon is, or was until very recently, running at a loss. Most companies can't
afford to do that for long.

~~~
hidenotslide
Depends how you define loss, a lot of people would disagree with you. They
have had significant positive free cash flow for a long time, over a decade at
least.[1] But since they reinvest the profits this becomes low net income.

[1]
[https://ycharts.com/companies/AMZN/free_cash_flow](https://ycharts.com/companies/AMZN/free_cash_flow)

------
mnm1
Amazon does this as well. I don't know why they would this and treat customers
this way, especially customers who purchase a lot of things from them, but I
do know it's not fraud. It's not even clear how this is legal since the return
clause is part of a contract. But they will close your account, prematurely
end your Prime membership, and there's nothing you can do about it. Nor can
you know when this will happen. That's how much companies like Amazon and Best
Buy value their customers. To say they treat them like shit is an
understatement.

~~~
btian
Imagine a "customer" hates Amazon, he can get Amazon to lose a lot of money by
buying a lot of things, open them, then return everything.

Amazon won't be a sustainable business if it can't reject "customers".

~~~
mnm1
Rejecting customers is not the same as breaking an agreement and literally
stealing money from customers by terminating a subscription they've already
paid for without a refund. If someone came up to you on the street and took
money from you by force, I doubt you'd be as understanding but the two
situations are equivalent: theft of real money.

------
maerF0x0
This could also be "how retailers are going to lose my business"

~~~
daveFNbuck
If you're taking advantage of returns in a way that hurts retailers, they want
to lose your business. Chances are that's not you, but it's probably still
worth it if they can eliminate the free riders.

~~~
xienze
Seriously. If you're like any normal person and occasionally return stuff,
you're fine. If you're just "renting" products 30 days at a time (yes, this
really does happen), retailers don't want anything to do with you. If you fall
into this second category, instead of getting all indignant, perhaps stop
taking advantage of return policies and retailers won't shun you.

~~~
softawre
Did you read the article?

The guy who was flagged had spent thousands at the store, and bought 3 phone
cases for 80$, then returned them as his only return ever, and got flagged.

~~~
lotsofpulp
That's one side of the story, according to the person who was denied future
refunds.

~~~
Sohcahtoa82
Yup. Guilty people tend to not admit to their crimes.

Go to the forums of any major online game such as League of Legends or World
of Warcraft and you'll semi-frequently find posts from players complaining
about being banned for no reason at all until a moderator or CS rep finally
has to step in and say "Actually, here's exactly what you did to get banned"
and it's always a legitimate reason.

------
dingo_bat
IMO no-questions asked returns should not be a thing. When you buy something,
you should make sure it is the right thing for your need. If it doesn't work
as advertised, sure return it. But if you bought something knowing full well
that it isn't right for you, you shouldn't be able to return it later.

For example, you buy a pair of shoes. Unless the sole is coming off or it has
some other defect, you don't get to return it a week later. When buying
online, the return conditions should also include size issues. Sometimes the
indicated size does not fit as well as you'd like to and there's no way for
you to find that out without wearing it.

~~~
acdha
Your last sentence shows why no questions policies exist. It’s easy to say
people show pick the right thing first but in real life most products have
details which are hard to learn in advance and it’s often hard to find all of
the details in advance (e.g. maybe you bought an appliance which does what you
want, fits the space, but the geometry for the power/water/vent/etc. is wrong
for your house. Whose fault is that?).

If you try to require justifications, all you’re doing is paying people to
interrogate customers - increasing the odds that they become former customers
- and the people you’d most want to stop are also the most likely to have come
up with a good excuse.

------
ben509
I'm more surprised to see that clothing retailers weren't listed. It's
incredibly common for "customers" to buy clothes and return them the next day.

~~~
iamleppert
Wow that’s really entitled behavior. When you buy something, the intention is
for you to own that item. It isn’t a trial period meant to facilitate an in-
home shopping experience. It’s tacky to make it a habit of regularly returning
things where the reason for the return could have been prevented.

It costs a lot of money to process returns for a retailer, and that cost is
often written down. It’s meant to be an exception during the sales process
(not a normal condition) and offered as a curtosey, not a defacto right.

~~~
phil21
> When you buy something, the intention is for you to own that item. It isn’t
> a trial period meant to facilitate an in-home shopping experience. It’s
> tacky to make it a habit of regularly returning things where the reason for
> the return could have been prevented.

I think your knowledge may be dated here. Most higher-end stores I've been to
in the past 5 years _absolutely_ encourage that behavior strongly with sales
reps suggesting you do so. They love it when my girlfriend is out shopping and
brings back a dozen shirt options for me to try on, and then immediately
returns 9 of them (heck, some stores even offer free shipping on the items you
decide against). The store just made a sale on 3 items they otherwise would
not have.

They of course don't want folks actually wearing those things out for a
"trial" period, but they know they must compete with on-line options that
operate in this exact manner.

~~~
Stratoscope
Trader Joe's does this with food. In my experience, they will take anything
back, any time, with no receipt. (Alcohol being the one exception, although
they did take a return of an unopened box wine that was leaking.)

A few times I've been in the store and overheard a conversation a customer had
with a crew member who encouraged them to bring something back if they didn't
like it.

I imagine this works out well for them: when you go back, you will probably
find something else to buy!

------
logfromblammo
We cannot accept your return, Mr. Costanza; this book has been _flagged_.

This only stops gormless shoppers from making reasonable returns. Everyone
else will do a chargeback for credit purchases, or file a complaint in small
claims for cash purchases. The moxious will call their credit card company
right at the returns desk and ask if they need a photograph of the posted
return policy.

~~~
kalcode
Well if you do and you constantly do chargebacks then you will get hit with
fraud from your credit card company.

~~~
cwkoss
What does it mean for a CC company to 'hit' someone 'with fraud'?

~~~
kalcode
They hit you with 'Chargeback fraud'. They can cancel your card, put it on
your credit history redcord and can choose to press charges.

~~~
logfromblammo
Has this actually happened to you or any of your acquaintances?

The retail-dispute resolution clauses of most credit agreements are very
biased towards the consumer. If you can document that you made at least one
good-faith effort at resolving the issue yourself before requesting that the
credit issuer handle it for you, then the retailer has to overcome the
presumption that the customer is always right in the arbitration.

As it's all about the money and private agreements, it is always possible that
someone who has more of it than you could use it to buy a more favorable
outcome. But it is also very unlikely that anyone would ever see a criminal
indictment over credit fraud before the damages exceed thousands of dollars.
No credit company wants to lose customers because they got a reputation for
grassing on their customers, but they would want to discourage their petty
frauds--they know they have some, with statistical certainty--from growing
worse by occasionally prosecuting the worst of the grand frauds.

If HSBC can knowingly launder drug money, and Wells Fargo can knowingly open
fake accounts, a credit bank can knowingly screw the retailer when one of
their credit customers does a bogus chargeback just because the cashier was
rude at the checkout.

I won't say bogus chargebacks are not a problem, but there is a threshold
below which it does not negatively affect the revenue of the bank, so no one
there will be paid to care about it. A computer program might evaluate it. It
might get randomly selected for human auditing. And most people are mostly
honest, so the fraud rate would still be low, even if no one policed it more
than a token amount. The credit banks's mission isn't to catch the frauds;
it's to make money. So they catch just the right amount of frauds in order to
make the most money.

------
donatj
Aren't there consumer protection laws against this sort of thing?

Update: I guess it varies state by state
[http://consumer.findlaw.com/consumer-
transactions/customer-r...](http://consumer.findlaw.com/consumer-
transactions/customer-returns-and-refund-laws-by-state.html)

Minnesota, where I (and Best Buy Headquarters) are located requires:

"A seller must clearly and conspicuously display written notice of its policy
in boldface type of a minimum size of 14 points. If a seller fails this
requirement, cash refunds are required of goods that are acceptable for
return."

Also, couldn't fraudsters circumvent this entirely by paying in cash?

~~~
gruez
I'm guessing it's legal because they warn you before denying it (ie. they
allow you to return it this time, but warn you that you won't be able to
return next time)

~~~
cpwright
On the bottom of every Home Depot receipt is "THE HOME DEPOT RESERVES THE
RIGHT TO LIMIT / DENY RETURNS. PLEASE SEE THE RETURN POLICY SIGN IN STORES FOR
DETAILS."

------
jasode
From the infographic: _" returning an item just when a store closes"_

Can anyone explain why that specific behavior is a red flag?

~~~
keebEz
Minimizes the time employees are willing to spend evaluating the return.

~~~
RickS
Also maximizes the time to discovery if there are real issues

------
mrfusion
Is anyone else finding a lot of the stuff they buy has minor wear and tear ie
probably was a return at some point?

The brand “new” pressure washer I bought was covered with scuff marks.

~~~
kabdib
I stopped buying things like motherboards, RAM and so forth from Frys quite
some time ago. Just too much stuff was returns, and not marked so.

(I once bought a desktop computer from them. It was, unsurprisingly, busted --
it wouldn't boot, and the OS installs I tried all failed. I had to threaten to
reverse charges on my credit card when they refused to take it back; their
argument was it was broken and they were unable to put it back on the shelf
and sell it to another customer!)

~~~
raincom
In old days at Frys (around 2001), Fry's used to check the returned products
(mother boards, memory, hard drives, etc) and check the serial number of
mother board/memory/hard drive against the serial number on the package. They
also used to do quick retest of returned motherboards, put them back in the
package, shrink wrap it, then place them back on shelves. People started
complaining about this, as customers have no way of knowing whether a package
is new or not.

Around 2007, Fry's started putting lables on returned packages. This way, one
can know whether something is returned or not. Some customers used to replace
things by keeping the same new package.

~~~
DrScump

      shrink wrap it, then place them back on shelves
    

I've never heard of this at Fry's; in CA, it would be illegal. And I've been
shopping there since the original site on Oakmead. (The current Sunnyvale
store is the _3rd_ she for the flagship.)

If you lack a receipt but bought with a card, knowing the card used and the
store bought at is enough for them to look it up.

------
joeevans1000
There seem to be two scenarios:

1) the third party company blocks sketchy transactions

2) the third party cuts off customers that are deemed 'not profitable' because
they return too many items

The first scenario seems perfectly reasonable. The second is evidence of a far
more scary direction things could be going in. Fender bender in that rental
car? No more Avis rentals. Had to negotiate that medical bill? No more medical
care at this facility.

------
an4rchy
It sounds like there might be a few false positives in this algorithm, which
negatively impacts the retailers from a publicity standpoint.

Also, can someone verify this but I thought that systems like this can be
easily manipulated,i.e buying with cash or buying online with PayPal,
different credit card etc, as that is PII and companies can't use it to
identify you or reject your claims, unless tied to a specific loyalty account.

~~~
ams6110
That's why they are always asking for your email address or phone number when
you check out. I always decline.

------
AcerbicZero
I dunno if it would help, but I buy everything with credit cards (not directly
linked to my bank account) so if I'm having issues returning something the
next step would be a dispute via the CC company.

It's amazing how many issues have been cleared up within a few days once the
money is on the line.

------
Zhenya
Sounds like the best way to combat this is to call your credit card and do a
charge-back. In that case, the retailer wouldn't even get the merchandise
back.

Make that very clear when you are initiating the return and you are being
refused.

------
forgotmypw
How Your Returns Are Used Against You at Best Buy, Other Retailers

Best Buy, other chains pay to track customers’ shopping behavior and limit
items they can bring back

(Picture of a best buy store with a car parked out front, and a man pushing a
cart with a TV towards the entrance)

At Best Buy, returning too many items within a short time can hurt a person’s
score, as can returning high-theft items such as digital cameras. Photo: Craig
Matthews/The Press of Atlantic City/Associated Press

By Khadeeja Safdar March 13, 2018 5:30 a.m. ET

Every time shoppers return purchases to Best Buy Co., they are tracked by a
company that has the power to override the store’s touted policy and refuse to
refund their money.

That is because the electronics giant is one of several chains that have hired
a service called Retail Equation to score customers’ shopping behavior and
impose limits on the amount of merchandise they can return.

Jake Zakhar recently returned three cellphone cases at a Best Buy store in
Mission Viejo, Calif., and a salesperson told him he would be banned from
making returns and exchanges for a year. The 41-year-old real-estate agent had
bought cases in extra colors as gifts for his sons and assumed he could bring
back the unused ones within the 15 days stated in the return policy as long as
he had a receipt.

The salesperson told him to contact Retail Equation, based in Irvine, Calif.,
to request his “return activity report,” a history of his return transactions.
The report showed only three items—the cellphone cases—totaling $87.43. He
asked the firm to lift the ban, but it declined. When he appealed to Best Buy
and tweeted his report, the company referred him back to Retail Equation.

“I’m being made to feel like I committed a crime,” said Mr. Zakhar. “When you
say habitual returner, I’m thinking 27 videogames and 14 TVs.”

Stores have long used generous return guidelines to lure more customers, but
such policies also invite abuse. Retailers estimate 11% of their sales are
returned, and of those, 11% are likely fraudulent returns, according to a 2017
survey of 63 retailers by the National Retail Federation. Return fraud or
abuse occurs when customers exploit the return process, such as requesting a
refund for items they have used, stolen or bought somewhere else.

Amazon.com Inc. and other online players that have made it easy to return
items have changed consumer expectations, adding pressure on brick-and-mortar
chains. L.L. Bean Inc., which once allowed customers to make returns even
years after they purchased items, recently clamped down, citing abuse.

Some retailers monitor return fraud in-house, but Best Buy and others pay
Retail Equation to track and score each customer’s return behavior for both
in-store and online purchases. The service also works with Home Depot Inc.,
J.C. Penney Co. , Sephora and Victoria’s Secret. Some retailers use the system
only to assess returns made without a receipt.

Best Buy uses Retail Equation to assess all returns, even those made with a
receipt. Dozens of shoppers have complained on Twitter, Facebook, Yelp and
other online forums that they were prevented from making returns despite
following the store’s policy.

Retail Equation said its services are used in 34,000 stores, but declined to
provide a full list of its clients. The Wall Street Journal learned of the
relationship between some retailers and the firm by reviewing return activity
reports from customers.

“We are hired by the retailers to review the returns, look for suspicious
situations and issue approvals, warnings or denials,” said Tom Rittman, a
marketing vice president at Appriss Inc., a Louisville, Ky., data analytics
firm that acquired Retail Equation in 2015.

The company said its system is designed to identify 1% of shoppers whose
behaviors mimic return fraud or abuse. Its statisticians and programmers have
built a customized algorithm for each retailer that scores customers based on
their shopping behavior and then flags people who exceed a certain score. The
company said it doesn’t share a person’s data from one retailer with another.

“You could do things that are inside the posted rules, but if you are
violating the intent of the rules, like every item you’re purchasing you’re
using and then returning, then at a certain point in time you become not a
profitable customer for that retailer,” said Mr. Rittman.

At Best Buy, returning too many items within a short time can hurt a person’s
score, as can returning high-theft items such as digital cameras. After the
Journal contacted Best Buy, the company said it created a dedicated hotline
(1-866-764-6979) to help customers who think they were wrongfully banned from
making returns.

“On very rare occasions—less than one tenth of one percent of returns—we stop
what we believe is a fraudulent return,” said Jeff Haydock, a spokesman for
Best Buy. “Fraud is a real problem in retail, but if our systems aren’t as
good as they can be, we apologize to anyone inappropriately affected.”

Best Buy CEO Hubert Joly said the company is “looking very seriously at the
process and partner around this.”

When a consumer makes a return, details about his or her identity and shopping
visit are transmitted to Retail Equation, which then generates a “risk score.”
If the score exceeds the threshold specific to the retailer, a salesperson
informs the consumer that future returns will be denied and then directs them
to Retail Equation to request a return activity report or file a dispute.

It isn’t easy for shoppers to learn their standing before receiving a warning.
Retailers typically don’t publicize their relationship with Retail Equation.
And even if a customer tracks down his or her return report, it doesn’t
include purchase history or other information used to generate a score. The
report also doesn’t disclose the actual score or the thresholds for getting
barred.

Dave Payne, a 38-year-old public relations professional, said he learned of
the system for the first time when he received a warning at a Best Buy in
Orlando, Fla. He was returning a digital scale and a router extender, with a
receipt for both items.

He said neither Best Buy nor Retail Equation provided a clear explanation for
what he did wrong: “Best Buy advertises a 15-day return policy, but they are
not advertising that at some point when you’ve crossed an arbitrary line, that
policy no longer applies.”

The ban on his account was lifted after he complained to the company’s public-
relations department, but he remains upset that his information is being
shared with a third party. “It creeps me out.”

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

------
Slansitartop
Can someone summarize? I don't have a WSJ account.

~~~
gruez
[https://www.facebook.com/l.php?u=https://www.wsj.com/article...](https://www.facebook.com/l.php?u=https://www.wsj.com/articles/how-
your-returns-are-used-against-you-at-best-buy-other-retailers-1520933400)

~~~
magic_beans
Well that's a neat trick to get around the paywall... Thanks!

~~~
Ziomislaw
It's easier to just click 'web' link here on HN. It will show you google
search results, and clicking on those bypasses the paywall too.

------
vinhboy
> He asked the firm to lift the ban, but it declined.

That's bad business. I think giving customers a second chance before shutting
them out is a better idea.

------
KKKKkkkk1
Retail Equation sounds like they came straight out of Little Britain's
"Computer Says No" sketch.
[https://www.youtube.com/watch?v=AJQ3TM-p2QI](https://www.youtube.com/watch?v=AJQ3TM-p2QI)

------
keebEz
Customer LTV applied to Retail. Amazon can already do it, so this is just
catch up.

~~~
r00fus
How does Amazon apply customer LTV?

~~~
13of40
In my case, I returned three relatively expensive items in a year and I got a
warning email from them. Googled the text of the mail and it turns out it's
the first step to getting your Prime account banned, and based on the contract
they probably wouldn't have to pro-rate the subscription fees.

------
joeevans1000
I thought one had the 'right' to return items in the returns policy... is
there fine print allowing them to deny you?

------
googlryas
Why does returning an item right before a store closes hurt your score? (per
the infographic in the article)

~~~
gruez
[https://news.ycombinator.com/item?id=16577824](https://news.ycombinator.com/item?id=16577824)

------
xivzgrev
Then we should have access to our records like credit scores and explanations
of what they mean.

------
misterbowfinger
non-paywall [https://outline.com/HKktYH](https://outline.com/HKktYH)

~~~
forgotmypw
Blank page for me?

~~~
Sohcahtoa82
Are you using NoScript or something similar?

~~~
forgotmypw
Yes, I have JS disabled.

------
michaelmrose
Anyone have the text of the article lots of us can't actually read?

------
test6554
I log in with the Wall Street Journal account that I finally broke down and
paid for and I get: Service temporarily unavailable.

