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Times may be tough, but women still need little black dresses to wear to posh parties. So some buy a fancy frock, dance the night away in it and then return it to the store, pretending that it does not fit. To ensure a refund, they may even unpick a seam and complain that the garment is faulty. This is an example of a growing problem. Retailers call it “de-shopping”.

Return fraud, which also includes such things as selling shoplifted goods back to the store from which they were pinched, is becoming more widespread. It cost American retailers $14.4 billion in 2011, according to the National Retail Federation, up from $9.4 billion in 2009. The worst offenders are women returning clothes.

Online stores are particularly vulnerable. Few people will risk buying something to wear without trying it on first, so cyber-retailers need to have generous returns policies. But other scams are gaining popularity, too. Electrical retailers say that some sports fans now “borrow” large high-definition televisions to watch big matches.

De-shoppers are becoming more organized, says Tamira King of Cranfield School of Management in Britain. They have worked out that returning items mob-handed, for example, is more successful, as managers worry about an ugly scene in their shops. News of branches with lenient staff spreads quickly. De-shoppers also scatter their returns across branches to avoid recognition as serial offenders.

Most do not see their behaviour as fraudulent, says Ms King. If retailers are gullible enough to take goods back, they think, then more fool them. Few would cross the line to shoplifting, which they (correctly) regard as criminal.

Stores can protect themselves. Many returns policies far exceed the minimum legal requirements, so there is room to be more strict. In 2009 Marks & Spencer, a British retailer famed for its no-questions-asked refund policy, reduced the window for returns from 90 to 35 days. It has now introduced dedicated returns desks, usually away from the shop floor. This makes shouters and screamers less likely to succeed, and helps with keeping a consistent policy across all its outlets. Many shops now also insist on identification checks, so that recidivists can be more easily tracked.

A delicate balance is needed. Having the best customer services can help a retailer stand out from its competitors. And irritating genuine customers is bad for business. So some shops also reward good behaviour. One occasional shopper at Lord & Taylor, a fancy New York department store, was surprised to be presented with a VIP card, usually reserved for more extravagant customers. It was, the store said, because in 20 years she had not returned a single item.

The Economist – March 2, 2012

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