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Shopper Outrage: Refund Loopholes

Full of (loop)holes

In a perfect world, every retailer would have the same restrictions to their refund system, but the truth is, today’s return policies are all over the map.

“The days of blanket policies are over,” Christine Frietchen, editor-in-chief of ConsumerSearch.com, the consumer advocacy website, tells MainStreet. This is because retailers in our current economic climate find themselves faced with two conflicting objectives: They need to protect the hit their profit margins experience through fraud (an estimated $3.68 billion), but also want to build customer loyalty.

Consumers are left to negotiate a mixed bag of fine print that can carry a multitude of restrictions and exclusions. This hodgepodge often makes it hard to differentiate a good policy from a bad one.

Frietchen points out that Target, for instance, has a long 90-day window of opportunity on returns, but will charge a 15% restocking fee on certain items. Wal-Mart, conversely, never charges a restocking penalty, but it only gives customers 15 days to return its electronic products for a full refund.

Photo Credit: Kiki1128

The Age of Transparency

One thing that you can count on, however, is that thanks to the popularity of online shopping, the fine print can be easier to find.

“Years ago, consumers could get stuck with a product because they didn’t know what the return policy was,” said Jason Goldberg, vice president of strategy and customer experience for CrossView, a business consulting firm. “Now, the Internet has forced a lot of transparency so consumers understand what exactly the return policy is before they buy a product.”

Transparency has also forced retailers into more direct competition with each other, which is why you will see changes being made to return policies fairly frequently.

“Ultimately, stores want consumers’ repeat business,” says Jeffrey B. Edelman, director of retail and consumer advisory services for consulting firm McGladrey. “Retailers want shoppers to feel comfortable bringing items back and hopefully exchanging them for other things in-store.”

To help you know what to look for in the fine print of your favorite retailer’s return policy, MainStreet broke down some common loopholes retailers use to make it harder to return a purchased product.

Photo Credit: Massimo Norbiato

Time limits

While some retailers, like online shoe store Zappos or luxury retailer Nordstrom, don’t require that you return products within a specified timeframe, most, Frietchen says, have adopted a 30-day policy on returns. This is essentially because an item depreciates in value over time. Saks, for instance, which shortened its policy from 60 to 30 days about a year ago, can’t sell fashion merchandise at its highest price when it’s no longer in season.

Retailers are also known to put stricter time limits on big-ticket items. Consider Best Buy, which recently shortened its return policy on “computers, monitors, projectors, camcorders, digital cameras, iPads, tablets and radar detectors” to 14 days.

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Restocking fee

A restocking fee is a charge you have to pay to return something after you have opened the box, regardless of whether or not it has been used. Sears, for instance, levies a 15% restocking fee on home electronics returned without the original box. It will also charge for returned mattresses, built-in home appliances, special orders on hardware, sporting goods, lawn and garden items, and automotive merchandise.

The idea here is similar to that of the time limit. Once an item is open, it can’t be sold as new merchandise anymore. Still, the fee, Goldberg says, is one that consumers find particularly egregious. What happens if you have to open the box to find out the product is broken? Fortunately, the restocking fee seems to be on its way out. Best Buy and Apple both eliminated theirs in January.

Photo Credit:  Yum9me

Cross-channel returns

Some retailers prohibit so-called cross-channel returns, meaning you can’t return something that you bought online at a brick-and-mortar store or, conversely, have an item that you bought in-store returned to the company’s online shopping facility. The policy was originally put in place due primarily to tax reasons.

“The stores are required to collect sales tax in every state they have facilities or employees (tax nexus), but the online business could avoid the requirement to collect sales tax in many states by not having any infrastructure in that state,” Goldberg explains. “If the online business allowed shoppers to return product to the stores, they would establish a tax nexus and be required to collect sales tax.”

According to CrossView’s research, some of the retailers that don’t allow multiple channel returns include American Apparel, Anne Klein,  Forever 21, Fossil, Guess, Maidenform, Modell’s Sporting Goods,  PetSmart, Skechers, Steve Madden, Under Armour and Victoria’s Secret.

Exceptions Noted

Often, retailers build exclusions into their return policies, either limiting returns outright on specific items or subjecting some items to different rules and regulations when you try to give them back.

Sometimes these exclusions are understandable. JCPenney, for example, doesn’t allow returns on special order merchandise, such as made-to-measure window coverings or monogrammed products. In other instances, Goldberg points out, the exclusion will be on the product that you were probably going to that retailer for in the first place (see Best Buy’s special 14-day policy on returns as an example).

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Return Without Receipt

CrossView’s research found that 65% of retailers currently require a receipt to issue a full refund. This is not to say that you’re stuck with an item if you’ve misplaced that little slip of paper, but it does mean that you might not be able to get cash back for it. Express, for instance, only offers merchandise credit if you try to return an item without a receipt.

Consumers may also end up eating part of the products’ original cost if an item happens to be on the sale when they are trying to make the return. Only the receipt will confirm if you paid full price or not.

“In most cases, you’re going to get a store credit for the price that day,” Frietchen says.

Photo Credit: out of ideas

I.D. Required

Sometimes you’ll need more than just a receipt to get a full refund. Retailers have long been known to ask for personal identification like an e-mail address or ZIP code so they can get something in return for giving you back your money. Best Buy just became the latest chain to implement such a policy this month, and Nike also has a similar policy in place.

Photo Credit: davidciani

Stores with the Best Return Policies

What stores have the least amount of exclusions written into their fine print? Find out in MainStreet’s roundup of the stores with the best return policies! Photo Credit: brewbooks

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