Business & Economy

Some retailers are holding your returns against you

Best Buy and other retailers use a third-party organization, The Retail Equation, to determine if a consumer should be authorized to make returns.
Best Buy and other retailers use a third-party organization, The Retail Equation, to determine if a consumer should be authorized to make returns.
Chris Carlson/AP

Shoppers and consumer advocates are up in arms after finding out that major retailers have been keeping closer tabs on them than they thought.

Retailers such as Best Buy, Victoria's Secret and the Home Depot have been working with a third-party organization to manage a database that determines which of their consumers should be banned from making returns, The Wall Street Journal reports.

The Retail Equation's database uses consumer behavior metrics such as how frequently a consumer makes returns and the dollar amount of those returns to calculate whether a shopper is considered a risk to a retailer and to prevent return fraud.

"Fraudulent and abusive returns are a $9-$17 billion per year problem for retailers in the United States," the Retail Equation says on its website.

Retailers say returns account for 10 percent of exchanges, and about 6.5 percent of those returns are fraudulent, according to the National Retail Federation.

The database is supposed to help decrease the probability that a return is fraudulent by recording the state-issued identification of a consumer and building a shopping history off of it.

A Home Depot representative Matt Harringan noted that, to combat return fraud, the home improvement retailer only uses the Retail Equation database for returns made without a receipt.

"We use it to prevent retail crime," he said. "There were organized retail crime rings, and those crimes negatively affect the entire community."

But some consumers say they've been caught up in the crackdown even though they weren't committing fraud.

Jake Zakhar returned three cellphone cases to a Best Buy in Mission Viejo, Calif., The Wall Street Journal reports. He had bought multiple cases in a variety of colors as gifts for his sons, thinking he would return the ones he didn't need. The exchange totaled $87.43.

The sales associate told Zakhar he would be banned from making returns and exchanges for a year after he returned the phone cases. Zakhar reached out to both Best Buy and to the Retail Equation to have the ban lifted, but they declined to do so.

Best Buy was not immediately available to comment on the matter.

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