Retailers get tough on return policies

A receipt shows a store's return policy

TEXT OF STORY

Kai Ryssdal: In just a couple of minutes you'll hear a discussion of the economics of gift giving. I hope I'm not giving too much away here when I say you should think very carefully before you really shell out for something nice this year. First, though, the other end of that gift transaction.

Retailers are bracing themselves for waves of post-Thanksgiving shoppers later this week. That will inevitably be followed by waves of post-Christmas returns. Both legitimate and not. Fraud is on the rise. And retailers are often left holding the bag. Marketplace's Nancy Marshall Genzer reports.


NANCY MARSHALL GENZER: The National Retail Federation says stores will lose more than $2.5 billion this holiday season to fraud, including something known as friendly fraud. Friendly because consumers think of it as more bending the rules than stealing. Take chargebacks. That's when a shopper charges something, then tells the credit card company, "Hey, I never charged that." Or, they order something online and claim it never showed up. If merchants get hit with too many chargebacks, the credit card company will fine them, up to a $100 a pop.

JOSEPH LAROCCA: Retailers become a victim.

That's Joseph LaRocca. He's a loss prevention expert at the National Retail Federation. He says stores with lots of chargebacks also pay higher transaction fees to credit card companies.

LAROCCA: When you're doing millions of dollars of business or billions of dollars of business on a particular credit card, those transactions all add up.

And chargebacks aren't the only types of friendly fraud. We all know that shopper who buys it, wears it and returns it.

Valerie Folkes teaches marketing at the University of Southern California. She says times are tough, but consumers don't want to do without.

VALERIE FOLKES: What that leads to sometimes is, consumers engaging in behaviors that maybe they can justify to themselves are really OK, but in fact are really unethical.

Michael Fischer is bracing for a wave of holiday hucksters. His family owns two electronics stores in northwest Iowa. He says, in this economy, there's no wiggle room. So, if, someone buys a big screen TV for that Superbowl party, then returns it, there's no refund.

MICHAEL FISCHER: We don't have a lot of give. There's just no margin for error right now.

Fischer has company. The National Retail Federation says almost 16 percent of retailers surveyed will tighten their return policies this holiday season.

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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