How to Return Holiday Gifts Without Hassle

BOSTON (MainStreet) -- Holiday returns seem like such an easy task until you're the poor sap at the customer service desk trying to explain why you opened the box for a $249 iPod you didn't want.

Returning unwanted gifts is still as common a post-holiday tradition as leaving Christmas lights up until the snow thaws or hitting the elliptical machine to work off a few dozen cookies. A Consumer Reports survey found that one in five Americans, or nearly 50 million in all, expect to return a Christmas gift this year. Roughly the same percentage of all adults were stuck with a bad gift last year, though 18% donated the offending present, 15% re-gifted it and 22% either returned it or just threw it out.

On the retail side, merchants believe that will translate to 9.9% of all holiday purchases being returned this year. That's up from 9.8% last year and a scant 8.8% back in pre-recession 2007. That's $46.3 billion in presents returning to from whence they came and a significant increase from the $39.7 billion in products consumers brought back four years ago.

Those returns are plentiful, but no one is saying they're easy. There are 82.5% of retailers that will leave their return policies unchanged, according to a National Retail Federation holiday survey of retailers, but that's only after 25% tightened restrictions in 2006, another 17% made returns more difficult during the recession-rattled 2008 holiday season and another 12.6% became far less lenient this year.

This is all in an attempt to ward off retail fraud that the NRF says accounted for 8.4% and $3.4 billion of all returns last year. In some cases, stores are emailing customers receipts to defend against counterfeiting, tracking customer purchases through loyalty programs and, at Macy's (Stock Quote: M), slapping customer return labels on purchases.

"Before you actually return items, you want to make sure you understand the return policy completely," says Tod Marks, senior editor at Consumer Reports. "Whereas many retailers are willing to accept items below a certain value without a receipt, even if you do have a receipt you can be turned away for any reason -- or you can get the last price the item sold for and not the price the purchaser paid for it."

What consumers and gift recipients shouldn't do, however, is expect all those newly tightened rules to go away any time soon. Those technological tweaks and policy changes have retailers in the NRF's survey expecting total fraudulent returns to drop by more than $200 million and the percentage of illicit returns to dip to 7.5%.

"Retailers have been adjusting their policies over the last three or four years and feel comfortable with the steps they've taken," says Joe LaRocca, senior adviser on asset protection for the federation. "Advancements in technology have really benefited companies' experience with customers and the recession and meltdown have allowed them to assess the product assortment."

To avoid a nasty case of return rage this holiday season, we teamed with Consumer Reports and the federation to provide the following steps for a speedy, static-free return process. Now take a deep breath and take back that horrible "gift" you've been diplomatically hiding beneath the couch:



Watch the calendar

Once you get a horrendous gift, the clock starts ticking on its return value.

Target (Stock Quote: TGT), for example, has cut its return window for laptops, e-readers, tablets, cameras and camcorders from 90 days to 45 this year. Sears (Stock Quote: SHLD) cut its return period for computers from 60 days to 30 and shortened its jewelry return time from 90 days to 60. Even when a retailer expands its holiday return window, as Wal-Mart (Stock Quote: WMT) did by pushing back eligibility from Nov. 15 to Nov. 1, that doesn't mean the timetable for certain items isn't shortening. Wal-Mart's camera return timeframe, for example, just dropped from 30 to 15 days.

"If you buy an item typically around Nov. 1, you'll typically be given a larger window of opportunity to return the item because companies know people buy gifts around this time of year," Consumer Reports' Marks says. "It may differ on the type of merchandise you buy."

This doesn't mean retailers are itching to help out with returns, however. The federation's survey found that the jittery, overstocked 2008 holiday season was the last time a majority of retailers (52%) made their return polices more lenient to accommodate holiday shoppers. Only 37% plan to lighten up on holiday consumers this year, which is still better than 2009's crash-jaded 28%. This means most customers suckered into October "Black Friday" sales pay the price for their haste and frugality by getting stuck with an item they can't exchange -- with TJX (Stock Quote: TJX) stores Marshall's and T.J. Maxx's Oct. 23-to-Jan. 2 return window being a notable exception.

Why the humbuggery? The NRF says consumers should blame fraud-prone shoppers obsessed with "wardrobing." That particular practice includes Carrie Bradshaw wannabes who buy a fabulous dress two days before New Year's Eve and return it as early as the New Year will allow or Clark Griswolds-in-waiting who buy a digital camera for Christmas vacation and return it after Santa leaves and the photos have been uploaded.

"When someone commits fraud or abuse inside the store, it always gets passed on to the consumers in the form of higher prices or policies," the NRF's LaRocca says. "Consumers might see things like time restrictions on when they can bring back merchandise or limitations on packaging and ticketing that will affect the way you can try on the test the items."

Bring some ID

Retailers such as Best Buy (Stock Quote: BBY) have played nightclub bouncer with the IDs of customers with returns for a few years now, but more are picking up the practice. A full 62% of merchants require a customer to show ID for returns without a receipt, while another 10.7% require one even if there's a receipt involved.

"We see a lot of evidence to the fact that a lot more retailers require that people bringing in an item for a return also bring in an ID like a driver's license," Marks says. "On the nefarious side, you have a lot of merchants today tracking behavior of customers who bring returns and they're always on the lookout for serial returners. If you're deemed a serial returner you can be turned away."

On the other hand, that same customer-tracking technology is taking both paper receipts and ID out of the equation in certain cases. The percentage of retailers requiring ID with a receipt dropped from 21% last year as e-receipts and customer loyalty programs made it easier to allow regular customers to exchange items without getting hassled.

"There's a real deep connection between customer loyalty programs, the information that is captured at the point of sale and online shopping channels and trying to integrate and establish a relationship with that customer," LaRocca says. "When you have that relationship, the customer knows your product and when they come back and make a return they convert that return into a sale."


Treat online purchases differently at bricks-and-mortar stores

Just because the Web site you played Santa at has the same logo as the store around the corner doesn't mean that bricks-and-mortar shop will joyously take your holiday return. Sports Authority stores, for example, will outright refuse to accept returned items bought online.

"You need to know when you buy online, in terms of the return policy, if the bricks-and-mortar store will take it back and vice versa," Marks says. "A lot of good retailers with sound customer service policies will take it back anyway, but other chains may not be so generous."

Don't open it if you don't want it

Restocking fees aren't what they used to be, but that doesn't mean they're extinct. Best Buy dropped its restocking fee last year and did away with 25% restocking fees for special orders this year.

Target, meanwhile, dropped its 15% restocking fee, but only in exchange for the right to refuse any returns in open packages.

"Don't open the box unless you're really sure you want it," Marks says. "A merchant can't sell as new an item that comes out of an open box, so they'll usually charge a restocking fee around 15%."

That's if you're lucky. Sears applies a 15% restocking fee to returned electronics, mattresses and built-in appliances. Amazon (Stock Quote: AMZN) ratchets that fee up to 50% for opened DVDs and software and clearly used books. Overstock.com takes the unkindest cut by demanding up to 60% for open or used items.

"Electronics are tricky because if you lose the cord or the manual, it can't be resold," LaRocca says. "There are cases where fraudulent returners will swap out the product, steal the part or program they need or steal the product and replace it with an item with the same weight and dimensions of the original after repackaging it so the store can't even tell it's been stolen."

Use that gift card or lose it

Bankrupt retailers such as Circuit City and Borders are long gone and Filene's Basement and Syms are following right behind, but their gift cards live on in the far recesses of sock drawers across America.

The CARD Act's reduction of gift card fees and loosening of restrictions took some of the urgency out of using a gift card. As a result, Consumer Reports says 25% of Americans have an unused gift card left over from last year and 55% have two or more still kicking around from the 2010 holiday season. If gift recipients are saving them for a rainy day or hoping a bankrupt company will redeem them, Marks says that's big mistake.

"There are no onerous fees, but you have to remember that if a company goes bankrupt, you're out of luck," he says. "You just become another creditor and your chances of getting that gift card back are probably nil."

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